Stealing is costly and the manager expects to lost C(S)=S2/2k when he steals because, for example, other people need to be paid off and there is some probability that the manager will be caught and punished. A higher value of k-representing, in this case, weaker corporate governance rules or a weaker legal system or both–means that it is less costly to steal. Thus, the value of stealing, S-C(S), is concave in S. The marginal value of stealing falls as the amount stolen increases because it becomes harder to steal as the absolute amount of theft increases; the stealing becomes more obvious and easier for a court to stop1.