Publications
Publications
- 2015
The Integrity of Private Third-party Compliance Monitoring
By: Jodi L. Short and Michael W. Toffel
Abstract
Government agencies are increasingly turning to private, third-party monitors to inspect and assess regulated entities’ compliance with law. The integrity of these regulatory regimes rests on the validity of the information third-party monitors provide to regulators. The challenge in designing third-party monitoring regimes is that profit-driven private monitors, typically selected and paid by the firms subject to monitoring, have incentives to downplay problems they observe in order to satisfy and retain their clients. This paper discusses the most important factors that our research and the research of many others has shown can affect the integrity of third-party monitoring and highlights some policy implications for regulators designing third-party monitoring regimes.
Keywords
Regulation; Compliance; Compliance Policies; Conflict Of Interest; Independent Third Party; Inspection; Audit Quality; Auditor; Audit; Environment; Production; Supply Chain; Quality; Government Administration; Working Conditions; Safety; Labor; Governing Rules, Regulations, and Reforms; Governance Compliance; Manufacturing Industry; Public Administration Industry; Accounting Industry; Service Industry; United States
Citation
Short, Jodi L., and Michael W. Toffel. "The Integrity of Private Third-party Compliance Monitoring." Harvard Kennedy School Regulatory Policy Program Working Paper, No. RPP-2015-20, November 2015. (Revised December 2015.)
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