Coerced Confessions: Self-Policing in the Shadow of the Regulator
Jodi L. Short
University of California Hastings College of the Law
Michael W. Toffel
Harvard Business School (HBS) - Technology & Operations Management Unit
Journal of Law, Economics and Organization, August 30, 2007
As part of a recent trend toward more cooperative relations between regulators and industry, novel government programs are encouraging firms to monitor their own regulatory compliance and voluntarily report their own violations. In this study, we examine how regulatory enforcement activities influence organizations' decisions to self-police. We created a comprehensive dataset for the Audit Policy, a United States Environmental Protection Agency (US EPA) program that encourages companies to self-disclose violations of environmental laws and regulations in exchange for reduced sanctions. We find that facilities are more likely to self-disclose if they were recently subjected to one of several different enforcement measures and if they were provided with immunity from prosecution for self-disclosed violations.
Keywords: Enforcement, regulations, environmental protection, compliance, voluntary programs, adoption
JEL Classification: I18, L51, K23, K32, K42, M14, Q28
Date posted: April 14, 2007
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