The Causes And Consequences Of Industry Self-Policing

Innovative regulatory programs are encouraging firms to police their own regulatory compliance and voluntarily disclose, or "Confess," the violations they find. Despite the "Winwin" 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. 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.