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Article
| NYU Journal of Law & Business
Evaluating the Effectiveness of Corporate Compliance Programs: Establishing a Model for Prosecutors, Courts, and Firms
by
Eugene F. Soltes
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Abstract
When prosecutors, courts, and regulators make charging and sentencing decisions, they must evaluate whether firms have effective compliance programs. Such evaluations are difficult because of the challenges associated with measuring effectiveness. Notably, these obstacles are not limited to evaluation by external parties, as firm managers also struggle to assess the returns associated with investments in compliance. To address these limitations and to facilitate a more consistent assessment, this article provides a framework to rigorously evaluate the effectiveness of compliance programs. I present empirical models that use data collected from compliance initiatives—including whistleblower hotlines, training exercises, and disciplinary procedures—to evaluate whether the initiatives are fulfilling their desired objectives. By being able to more rigorously evaluate compliance programs with data and empirical analysis, prosecutors and courts will be able to more readily discern “window-dressing,” and firm managers will be able to better understand the efficacy of their investments in compliance.
Keywords: Corporate Governance;
Governance Compliance;
Performance Effectiveness;
Performance Evaluation;
