You committed a crime and while the authorities aren't entirely certain that you're involved, they have been asking some uncomfortable questions lately. What do you do? For some, the answer is "leave." Pack your bags, buy a bus ticket, and brush up on your Spanish and hope you've gotten out before you get that knock on the door. A recent study from Queens University has found that publicly traded corporations can react in similar ways, saying there is a strong connection between financial misreporting and relocating the company headquarters. 

The study's abstract says that this is because SEC enforcement is generally done on a region by region basis, and so businesses with a higher probability of conducting financial fraud are more likely to move to a location where the regional SEC office has a history of weaker enforcement than the one they're in now. Specifically, the researchers found that "a one standard deviation change in the natural logarithm of the fraud score [a metric developed in 2011]... is associated with a 0.16 percent higher likelihood of moving headquarters int he following year. Similarly, whether earnings reported for a fiscal year are misreported and restated later is associated with a 0.12 percent higher likelihood of relocating headquarters." 

This might not seem like a big difference, but the paper says that the overall probability that a publicly traded company will change its headquarters is only 1.47 percent, making these numbers significant. 

And once they do move, do these companies keep their nose clean? The study says no. Once they are relocated, the firms "are more likely to continue conducting fraud and restate previously reported earnings than firms that did not relocate." 

This doesn't mean that anytime a company moves its headquarters that there's fraud afoot. What needs to be watch, said the study, is the reason why it's moving. Firms with legitimate reasons for moving tend to be very clear about these reasons. On the other hand, firms that are moving to escape regulatory scrutiny, said the study, tend to give very vague reasons for why they're moving, if they even give reasons at all.