Trust: the unwritten cost of white-collar crime

Abstract

Purpose – The purpose of this study is to empirically assess the theorized importance of trust and resource removal following white-collar crime. Design/methodology/approach – Two studies are conducted using data from the Washington Post and ABC News Poll following the savings and loan scandal and the dotcom bust. The first examines trust in corporate contexts, and the second examines direct resource withdrawal from financial institutions. Findings – Results of a series of logistic regressions suggest that trust is impacted by high-profile white-collar crime. Models 1 and 2 find evidence that trust is a strong predictor of belief in investing in a given industry. Models 3 and 4 provide evidence that high-profile trust breaches lead to resource withdrawal, adding to the economic damages incurred directly from white-collar crime. Social implications – This study provides evidence that white-collar crime can create much larger financial consequences than immediate losses. Originality/value – Despite considerable theoretical ties between white-collar crime and trust, little empirical evidence exists to support this notion. This study provides two empirical studies that address the theoretical link.

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