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  • 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

Citation

Soltes, Eugene F. "Evaluating the Effectiveness of Corporate Compliance Programs: Establishing a Model for Prosecutors, Courts, and Firms." NYU Journal of Law & Business 14, no. 3 (Summer 2018): 965–1011.
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About The Author

Eugene F. Soltes

Accounting and Management
→More Publications

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  • Corporate Criminal Investigations and Prosecutions By: Leo R. Tsao, Daniel S. Kahn and Eugene F. Soltes
  • Should I Stay or Should I Go? Assessing Risk in Carlos Ghosn's International Escape By: Eugene F. Soltes, Grace Liu and Muneeb Ahmed
  • Is ‘Not Guilty’ the Same as ‘Innocent’? Evidence from SEC Financial Fraud Investigations By: Eugene F. Soltes and David H. Solomon
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