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Administrative agencies are increasingly establishing voluntary self-reporting programs both as an investigative tool and to encourage regulated firms to commit to policing themselves. We investigate whether self-reporting can reliably indicate effective self-policing efforts that might provide opportunities for enforcement efficiencies. We find that regulators used self-reports of legal violations as a heuristic for identifying firms that are effectively policing their own operations, shifting enforcement resources away from voluntary disclosers. We also find that firms that voluntarily disclosed regulatory violations and committed to self-policing improved their regulatory compliance and environmental performance, suggesting that the enforcement relief they received was warranted. Collectively, our results suggest that self-reporting can be a useful tool for reliably identifying and leveraging the voluntary self-policing efforts of regulated companies.
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1
Coming clean and cleaning up: is voluntary self-reporting a signal of effective self-policing?
2008, Harvard Business School]
in English
- Rev.
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Coming clean and cleaning up: does voluntary self-reporting indicate effective self-policing?
2008, Harvard Business School
in English
- 3rd rev.
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Book Details
Edition Notes
"May 2008, revised July 2009, March 2010, October 2010"--Publisher's web site.
Previously published as: Coming clean and cleaning up--is voluntary disclosure a signal of effective self-policing?
Includes bibliographical references.
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Work Description
As regulators increasingly embrace cooperative approaches to governance, voluntary public-private partnerships and self-regulation programs have proliferated. However, because few have been subjected to robust evaluation, little is known about whether these innovative approaches are achieving their objectives and enhancing regulatory effectiveness. In the context of a federal government program that encourages companies to voluntarily self-police and self-disclose regulatory violations, we examine how participation affects the behaviors of regulators and regulated facilities. We find that on average, facilities that committed to self-police experienced a decline in abnormal events resulting in toxic pollution, and that regulators reduced their scrutiny over self-policing facilities. Upon closer examination, we find strong evidence of these effects among facilities with clean past compliance records, but find no such evidence of among facilities with more problematic compliance histories. These findings support the theoretical promise of meaningful self-policing practices and suggest that voluntary disclosure can serve as a reliable signal of future compliance-but only among a subset of facilities.
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