| Embezzlement is a type of occupational fraud and has been a problem for companies operating in the United States economy for a very long time. Research has shown the Association of Certified Fraud Examiners (ACFE) estimates embezzlement to be 5-7% of annual company revenue. A literature review on embezzlement has yielded many research studies addressing the causes of embezzlement, perpetrators of embezzlement, demographics of the perpetrators of embezzlement, and the industries where embezzlement has been the most prevalent. However, there was a gap in these research efforts relating to the effect economic business cycles, such as recessions and expansions, have on the frequencies of discovered and reported cases of embezzlement. The current study was undertaken to address this gap. Embezzlement data was requested and received from the Department of Criminal Justice Investigative Services (CJIS) covering the years 1991-2012. The data included the embezzlement unique number, the date the embezzlement occurred, and the originating law enforcement agency reporting the case. In addition, economic data was collected from the National Bureau of Economic Research (NBER) on recessions and expansions between the years 1991-2012. An ARIMA time series analysis was used in analyzing the data to test the relationship between the occurrence of embezzlement and economic recessions and expansions. The results of the ARIMA model with economic business cycles as a predictor was not significant suggesting the economic business cycles did not significantly affect the number of discovered and reported embezzlements in the years of 1991 to 2012. |
