Trung T. H. Nguyen

Published/Accepted Papers

The Effectiveness of White-Collar Crime Enforcement: Evidence from the War on Terror

• Journal of Accounting Research 59 (2021): 5-58

• Media mention: Quartz

This paper studies the deterrent effect of criminal enforcement on white-collar criminal activities. Using the 9/11 terrorist attacks as a shock to the FBI's allocation of investigative resources and priorities, and variations in the Muslim population in the United States as a measure of geographic variations in the shock, I examine two questions: (1) Does the bureau's shift to counter-terrorism investigations after 9/11 lead to a reduction in the enforcement of laws targeting white-collar crime? (2) Does white-collar crime increase as a result of less oversight? Using a difference-in-differences estimation approach, I find that there is a significantly greater reduction in white-collar criminal cases referred by FBI field offices that shift their investigative focus away from white-collar crime to counter-terrorism. I also find that areas overseen by FBI field offices that shift their attention from white-collar crime to counter-terrorism experience a significantly greater increase in wire fraud, illegal insider trading activities, and fraud within financial institutions.

How Does Judges' Personal Exposure to Financial Fraud Affect White-Collar Sentencing?, with Aneesh Raghunandan and Alexa Scherf

• Journal of Accounting Research 63 (2025): 989-1029.

We study whether federal judges’ personal exposure to financial fraud affects sentencing outcomes in white-collar cases. We first assemble, through both machine learning tools and extensive hand collection, two novel datasets: (i) individual judges’ asset ownership from 2003 through 2016 and (ii) case-level sentencing outcomes over the same period. We use this data to construct a novel measure of financial fraud exposure based on judges’ direct shareholdings in firms that commit securities fraud. Using this measure, we exploit the random assignment of cases to judges to examine whether judges’ exposed to fraud in one firm (i) are less likely to rule in favor of defendants in white-collar cases involving other firms and (ii) less likely to grant favorable pre-trial motions to defendants. To test whether the loss of trust associated with judges’ ‘victimhood experience’ is the mechanism underlying our results, we (i) compare our treatment sample against judges with indirect ownership of fraud firms via mutual funds and (ii) examine whether our treatment effect is concentrated amongst judges who are informed investors. Our study broadens our understanding of the spillover effects of financial fraud enforcement and contributes to the literature on how judges’ personal experiences can shape judicial decision-making.

Working Papers

Do Transparency Enhance Environmental Justice?, with Grace Fan and Xi Wu.

• Journal of Accounting and Research Conference 2026

We study how enhanced information transparency, particularly in visual formats, shapes regulatory oversight, public scrutiny, and firm behavior in the context of environmental justice (EJ). Our setting is the sequential private and public releases of EJScreen, the U.S. Environmental Protection Agency (EPA)’s mapping tool that consolidates dispersed demographic and environmental data into accessible, intuitive maps. Using difference-in-differences analyses, we show that the tool’s internal launch increased EPA monitoring of facilities in vulnerable communities identified by the map, followed by reductions in targeted pollutants, while its public release spurred non-governmental organizations (NGOs) campaigns and broader civic attention. Importantly, we also document spillover effects following the tool’s public launch: reductions in greenhouse gas (GHG) emissions, which are not directly targeted by EJScreen but are of broader concern. The effects on GHG are stronger in areas with greater media presence and public engagement, and are robust to complementary analyses using a comparable California screening tool. Overall, our findings highlight how intuitive, visual disclosure can empower scrutiny by both regulators and the public to advance EJ initiatives.

Do Disruptive Climate Events Affect Environmental Regulators' Monitoring?, with Grace Fan and Xi Wu.

• Under submission

We examine how experiences with disruptive climate events impact the Environmental Protection Agency’s (EPA) monitoring activities. Using a difference-in-differences research design and exogenous variation in the exposure of EPA regional offices to major hurricanes, we find that exposed EPA regulators increase their monitoring efforts, measured by both inspection frequency and length, at facilities in their jurisdictions that are not struck by the disasters (non-exposed facilities). The effects are greater for regional offices located closer to the disaster zone, where the effect of the disaster is likely to be more salient. Moreover, regional offices that are exposed to major hurricanes are more likely to take enforcement actions against non-exposed facilities in their jurisdictions. Our results are consistent with EPA regulators changing their risk perception of regulated facilities following disruptive climate events and exerting more monitoring efforts. We also find that these non-exposed facilities release fewer toxic chemicals in response to increased regulatory scrutiny. Our findings highlight the importance of regulators’ experiences in shaping their monitoring activities and the subsequent effects on regulated entities.

Once Bitten, Twice Shy: Learning From Corporate Fraud and Corporate Governance Spillovers

• Media mention: Institutional Investor

This paper finds that investors learn from their experience with corporate fraud and financial misconduct and modify their investment behavior to avoid suspicious firms and increase corporate governance efforts. More specifically, mutual funds that experienced corporate fraud at one of their portfolio firms subsequently chose firms with lower probabilities of fraud and financial misconduct, compared to otherwise similar funds that did not experience any corporate malfeasance incidents. Furthermore, mutual funds that experienced corporate fraud intensify their corporate governance activities and vote significantly more against management at other  firms in their portfolios, compared to the voting behavior at the same firms by otherwise similar funds but that did not experience any fraud, especially on issues related to director election, audit, and financial statement. I find that fraud-experienced investors are significantly less likely to vote for problematic directors. Finally, I find that firms held by more fraud-experienced investors observe a significant drop in the propensity to get an accounting fraud sanction in subsequent years. Taken together, my results show that learning and experience play a critical role in corporate governance spillovers, fraud detection, and deterrence.

It is Easy to Be Brave from a Safe Distance: Proximity to the SEC and Insider Trading, with Quoc H. Nguyen

• 2015 Northern Finance Association Meeting

• Media mention: Bloomberg

We use hand-collected data from SEC's litigation releases for insider trading violations to examine the effect of geographic distance on its enforcement activities and insider trading activities. First, we find that the SEC is more likely to investigate companies that are closer to its offices. Second, we find that illegal insider trading increases with a company's distance from an SEC office. Lastly, we utilize the closure of SEC offices as exogenous shocks to geographic proximity and find that insider trading at nearby companies increase significantly compared with trading at otherwise similar companies not affected by the closures. Overall, our findings suggest that information asymmetry and resource constraints prevent regulators from monitoring effectively.

How does legislators’ personal exposure to financial fraud affect support for financial regulation? (with Alexa Scherf and Aneesh Raghunandan).

We examine whether U.S. legislators’ personal exposure to financial fraud, via their individual shareholdings in fraud firms, affects the likelihood that they support legislation that tightens financial regulation. Ex-ante, this relation is unclear; while fraud exposure may make legislators more personally sympathetic to such regulation, legislators’ party-related and electoral incentives may inhibit any shifts in their voting behavior. Empirically, we find evidence suggesting that legislators’ voting patterns change in response to fraud exposure: incremental to party affiliation, legislators are more likely to vote in favor of financial regulation after exposure to financial fraud. These effects are stronger for more senior legislators, but dampen when a legislator is more reliant on campaign contributions from the financial sector. We further examine whether personal fraud exposure is associated with legislators sponsoring or co-sponsoring legislation which supports financial regulation. We observe a positive but insignificant association between exposure and sponsorship. Collectively, our results highlight a personal – rather than professional – factor which may affect oversight of the financial sector and financial regulation.

Selected Work in Progress

Presidential Casting Behavior and the Predictability of Political Scandals (with Lauren Cohen and Dong Lou). 

The Effect of Social Protests on Judicial Decisions (with Lisa Liu and Claudia Imperatore).