A Facility-Level Analysis of the Long-Term Consequences of Environmental Auditing Among Hazardous Waste Generators

37 Pages Posted: 29 Sep 2009  

Lirong Liu

Sam Houston State University - College of Business Administration - Department of Economics and International Business

Sarah L. Stafford

College of William and Mary - Arts and Sciences; William & Mary Law School

Mary F. Evans

Claremont McKenna College - Robert Day School of Economics and Finance

Date Written: June 17, 2009

Abstract

Several rationales recently proposed to explain the willingness of firms to voluntarily conduct environmental audits suggest the potential for environmental audits to impact compliance outcomes in the long run. Using a unique facility-level dataset from Michigan, we examine the determinants of environmental auditing and the effects of environmental auditing on inspection frequency and long-term compliance with the U.S. Resource Conservation and Recovery Act (RCRA) among hazardous waste generators. Our empirical methodology accounts for the potential endogeneity of the audit outcome and censoring of the future compliance measure. We find that larger facilities and those subject to more stringent regulations are more likely to audit. We also find that facilities with poor compliance records are less likely to audit. However, we find no significant long-run impact of auditing on inspection frequency or RCRA compliance among these Michigan facilities.

Keywords: environmental auditing, hazardous waste, compliance, enforcement

JEL Classification: Q53, Q58, L51

Suggested Citation

Liu, Lirong and Stafford, Sarah L. and Evans, Mary F., A Facility-Level Analysis of the Long-Term Consequences of Environmental Auditing Among Hazardous Waste Generators (June 17, 2009). Claremont McKenna College Robert Day School of Economics and Finance Research Paper No. 2009-16. Available at SSRN: https://ssrn.com/abstract=1479836 or http://dx.doi.org/10.2139/ssrn.1479836

Lirong Liu (Contact Author)

Sam Houston State University - College of Business Administration - Department of Economics and International Business ( email )

SHSU Box 2118
Huntsville, TX 77341-2118
United States

Sarah L. Stafford

College of William and Mary - Arts and Sciences ( email )

104 E Morton Hall
Williamsburg, VA 23187
United States

William & Mary Law School ( email )

South Henry Street
P.O. Box 8795
Williamsburg, VA 23187-8795
United States

Mary F. Evans

Claremont McKenna College - Robert Day School of Economics and Finance ( email )

500 E. Ninth St.
Claremont, CA 91711-6420
United States
909.607.3423 (Phone)

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