Is Fraud Contagious? Coworker Influence on Misconduct by Financial Advisors

Stephen G. Dimmock, William C. Gerken, Nathaniel P. Graham

Research output: Contribution to journalArticlepeer-review

80 Scopus citations


Using a novel data set of U.S. financial advisors that includes individuals' employment histories and misconduct records, we show that coworkers influence an individual's propensity to commit financial misconduct. We identify coworkers' effect on misconduct using changes in coworkers caused by mergers of financial advisory firms. The tests include merger-firm fixed effects to exploit the variation in changes to coworkers across branches of the same firm. The probability of an advisor committing misconduct increases if his new coworkers, encountered in the merger, have a history of misconduct. This effect is stronger between demographically similar coworkers.

Original languageEnglish
Pages (from-to)1417-1450
Number of pages34
JournalJournal of Finance
Issue number3
StatePublished - Jun 2018

Bibliographical note

Publisher Copyright:
© 2018 the American Finance Association

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics


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