Is Broker Misconduct Contagious? Learning to be Bad or Birds of a Feather

Grants and Contracts Details


In the brokerage industry, investor protection is based on disclosures, which are administered by a self-regulatory agency, FINRA. Current disclosures focus on the individual brokers, neglecting any information embedded in the broker’s social networks. We will explore how the (mis)conduct of others in a broker’s professional network relates to the broker’s (mis)conduct. We will attempt to discern the channels by which the similarity within networks of brokers emerges. One potential channel is through social influence: i.e., brokers may learn how to commit misconduct by observing the behavior of colleagues; brokers may also learn social norms from their colleagues. Another potential channel is assortative matching (homophily): brokers may choose to associate with others who share the same propensity to engage in misconduct. Determining the channels by which similarity in behavior emerges has important implications for regulations in combating misconduct as well as for helping investors to avoid misconduct.
Effective start/end date11/11/1312/31/15


  • West Virginia University: $10,000.00


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