THE IMPACT OF FINANCIAL PERFORMANCE ON FREQUENCY OF CORPORATE CRIME -A LATENT VARIABLE TEST OF STRAIN THEORY

Quantitative research conducted to examine correlates of corporate cri me has tended to use multiple regression techniques employing single i ndicator variables. This article argues that, because corporations str ive to attain multiple goals, a multiple indicator latent variable app roach may more accurately represent the various dimensions of corporat e financial performance and illegality. Using LISREL to construct stru ctural equation models, this research involves secondary analysis of d ata collected by Clinard and his colleagues on the 461 largest manufac turing firms in the United States. A negative relationship is reported between two latent variables representing financial performance and o ne latent variable representing corporate illegality. The article conc ludes that strain theory may be an appropriate explanation for some ty pes of corporate crime.