van Erp, Judith --- "Naming and Shaming in Regulatory Enforcement" [2011] ELECD 945; in Parker, Christine; Nielsen, Lehmann Vibeke (eds), "Explaining Compliance" (Edward Elgar Publishing, 2011)

Book Title: Explaining Compliance

Editor(s): Parker, Christine; Nielsen, Lehmann Vibeke

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781848448858

Section: Chapter 15

Section Title: Naming and Shaming in Regulatory Enforcement

Author(s): van Erp, Judith

Number of pages: 21

Extract:

15. Naming and shaming in regulatory
enforcement
Judith van Erp*

INTRODUCTION

Despite the increasing efforts of enforcement agencies to stimulate vol-
untary compliance, an important part of enforcement action still consists
of imposing sanctions. One aim of sanctions is general deterrence: they
should communicate a threat that will prevent other potential offenders
from breaching the law. A now considerable body of empirical research
has shown however that financial sanctions do not deter as strongly as
regulators sometimes expect. Their impact is often better characterized as
`weak signal, weak threat' (Thornton et al., 2005). The effect of sanctions
on compliance may be much stronger, when in addition to their finan-
cial impact, they can also be expected to cause damage to a company's
reputation.
The additional threat of reputational damage becomes more realistic
as enforcement agencies increasingly use publicity to communicate their
activities, including their enforcement decisions, to the wider public.
Publicity may be intended to contribute to the transparency, accountabil-
ity and legitimacy of enforcement and ultimately, to maintaining trust in
markets. This chapter, however, discusses a more instrumental reason for
the use of publicity in enforcement: the publication of names of corporate
offenders as an explicit part of a regulatory enforcement strategy that is
intended to increase business compliance. Disclosure policies or `regula-
tion by revelation' is sometimes characterized as a third wave of regula-
tory strategies after command and control and market based regulation
(Florini, 1998; Fung et al., 2007; Gupta, 2008).
The publication of the names ...