The Causes and Consequences of Industry Self-Policing

16 Pages Posted: 24 Sep 2007 Last revised: 11 Jan 2011

See all articles by Jodi L. Short

Jodi L. Short

UC Law, San Francisco

Michael W. Toffel

Harvard Business School

Date Written: September 25, 2007


Innovative regulatory programs are encouraging firms to police their own regulatory compliance and voluntarily disclose, or confess, the violations they find. Despite the win-win rhetoric surrounding these government voluntary programs, it is not clear why companies would participate and whether the programs themselves do anything to enhance regulatory effectiveness. Tasked with monitoring the legality of its own operations, why would a firm that identifies violations turn itself in to regulators rather than quietly fix the problem? And why would regulators entrust regulated entities to monitor their own compliance and enforce the law against themselves? This paper addresses these questions by investigating the factors that lead organizations to self-disclose violations, the effects of self-policing on regulatory compliance, and the effects of self-disclosing on the relationship between regulators and regulated firms. We investigate these research questions in the context of the US Environmental Protection Agency's Audit Policy.

Suggested Citation

Short, Jodi L. and Toffel, Michael W., The Causes and Consequences of Industry Self-Policing (September 25, 2007). HBS Technology & Operations Mgt. Unit Research Paper No. 08-021, Available at SSRN: or

Jodi L. Short (Contact Author)

UC Law, San Francisco ( email )

200 McAllister Street
San Francisco, CA 94102
United States

Michael W. Toffel

Harvard Business School ( email )

Boston, MA 02163
United States
617.384.8043 (Phone)

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