Turning Themselves in: Why Companies Disclose Regulatory Violations
University of California Center for Responsible Business Working Paper No. 17
43 Pages Posted: 16 Aug 2005
Date Written: July 13, 2005
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 enforcement activities, statutory protections, community pressure, and organizational characteristics influence organizations' decisions to self-police. We created a comprehensive dataset for the "Audit Policy", a United States Environmental Protection Agency program that encourages companies to self-disclose violations of environmental laws and regulations in exchange for reduced sanctions. We find that facilities were more likely to self-disclose if they were recently inspected or subjected to an enforcement action, were narrowly targeted for heightened scrutiny by a US EPA initiative, and were larger and thus more prominent in their environment. While we find some evidence that state-level statutory immunity facilitates self-disclose, we find no evidence that statutory audit privilege does so.
Keywords: Enforcement, regulations, environmental protection, compliance, voluntary programs, adoption
JEL Classification: I18, L51, K23, K32, K42, M14, Q28
Suggested Citation: Suggested Citation