Behavioral ethics, behavioral compliance

Langevoort, Donald C.

doi:10.4337/9781783474479.00020

Cited by 16 publications

(5 citation statements)

References 62 publications

(50 reference statements)

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“…It seems in fact that “(…) pursuing the basic enforcement goals of (1) inducing efficient activity levels and (2) minimizing the joint costs of misconduct and enforcement (…) places different, and potentially inconsistent, demands on a corporate liability regime” (Arlen & Reinier, ). As a consequence, “(…) perhaps in the exercise of bona fide business judgment, firms choose compliance structures in which the values of motivation and cohesion (not to mention out‐of‐pocket costs) often trump high‐powered monitoring, thus opting for higher compliance risk because it is the most sensible strategy” (Langevoort, ; see also Langevoort, ). The upshot may be the so‐called “paradox of compliance” (Laufer, )—an observed positive correlation between the number of operating compliance programs and the number of white‐collar crime prosecutions.…”

Section: Applicationsmentioning

confidence: 99%

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Principles versus principal: Reconciling norm compliance and shareholder value

Sinclair‐Desgagné

2019

J Public Economic Theory

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This paper considers situations where an agent (say, a polluting firm's CEO) must allocate his nonobservable effort across two distinct tasks (say, revenue/market share enhancement and environmental stewardship), and where two principals (say, the firm's shareholders and an external stakeholder) hold diverging viewpoints on what the best allocation should be. Both characteristics of this context—multitasking and conflicting principals—are normally seen as obstacles to strengthening the agent's incentives. This paper proposes a simple arrangement, based on contingent monitoring and clawbacks, that can overcome these obstacles. Under this arrangement, the principals would end up coordinating their respective incentive schemes so that the agent considers his two tasks as complementary utility‐increasing activities. Applications to regulatory compliance, corporate social responsibility, and innovation management are briefly sketched.

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Section: Applicationsmentioning

confidence: 99%

“…This often turns out to be the case for tasks relating to environmental compliance, as several authors have shown (see, e.g., Laufer, ; Langevoort, 2001, ).…”

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confidence: 90%

Principles versus principal: Reconciling norm compliance and shareholder value

Sinclair‐Desgagné

2019

J Public Economic Theory

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“…These ideas have enjoyed broad support among researchers across disciplines and are now reflected in legal regimes across nearly every subject matter area (Langevoort 2017). Nonetheless, skeptics remain.…”

Section: Lawand Social Inquirymentioning

confidence: 99%

“…To the contrary, numerous articles discuss the technical aspects of financial institution internal compliance, including what the law requires, what constitute industry best practices and new developments, and specific cases of compliance failures (Murphy 2011;Simons 2013). In addition, some scholars of financial regulation, most notably Donald Langevoort, have made important contributions in the compliance area, drawing from a variety of disciplines, including psychology, sociology, and economics (Langevoort 2017;Langevoort 2018). Finally, scholars of white-collar crime have engaged with and contributed to the empirical literature on internal compliance (Arlen 2012;Hess 2016).…”

Section: New Governance and Financial Regulationmentioning

confidence: 99%

Let’s Talk: What FinReg Can Learn from New Governance (and Vice Versa)

Krawiec¹

2019

Law Soc. Inq.

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Lauren Edelman’s Working Law: Courts, Corporation, and Symbolic Civil Rights (2016) is remarkably relevant to the study of financial regulation. In particular, three factors that Edelman identifies as contributing to legal endogeneity and symbolic compliance—ambiguous law, a lack of clear outcome measures, and the presence of legal intermediaries—are especially salient in this context. It has long been recognized that powerful financial institutions and the lawyers, lobbyists, and other agents who serve them have the ability to influence the law ex ante, through political lobbying. Edelman’s work reinforces the point that they may also do so ex post through an endogenous process of interpretation, implementation, and, ultimately, enshrinement of symbolic compliance with ambiguous law.

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“…This case illustrates that the "compliance function" (Miller 2018) within Volkswagen did not operate effectively within the firm as an internal control mechanism. With the potential for conflicting organizational objectives around profitability and environmental performance, there is renewed interest in corporate behaviour towards regulatory compliance and the legal implications for managers and the corporation of environmental non-compliance (Langevoort 2018).…”

Section: Introductionmentioning

confidence: 99%

A note on organizational structure and environmental liability

Franckx

Vries

White

2021

Environ Econ Policy Stud

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This paper employs a multi-task principal-agent model to examine how a corporation’s organizational structure and liability rules for environmental damages affect the incentive schemes offered to managers. We derive environmental liability rules for risk averse managers under two alternative organizational structures: a product-based organization (PBO) and functional-based organization (FBO). For a PBO, it is shown that efficiency is independent of whether the firm or managers are liable for environmental damages; in a FBO it is optimal either to hold the firm liable for environmental damages or, equivalently, to only hold the environmental managers liable for damages. It is also shown that the two organizational structures are equally efficient when there is no correlation between environmental damages from products and no spillover between managerial effort across products or functions. Numerical results further reveal that beneficial spillovers between functions for the same product favours a PBO over a FBO; beneficial spillovers across functions favours a FBO.

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Behavioral ethics, behavioral compliance

Cited by 16 publications

References 62 publications

Principles versus principal: Reconciling norm compliance and shareholder value

Principles versus principal: Reconciling norm compliance and shareholder value

Let’s Talk: What FinReg Can Learn from New Governance (and Vice Versa)

A note on organizational structure and environmental liability

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