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Do environmental audits improve long-term compliance? Evidence from manufacturing facilities in Michigan

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  • Mary Evans

    ()

  • Lirong Liu

    ()

  • Sarah Stafford

    ()

Abstract

Using a unique facility-level dataset from Michigan, we examine the effect of environmental auditing on manufacturing facilities’ long-term compliance with U.S. hazardous waste regulations. We also investigate the factors that affect facilities’ decisions to conduct environmental audits and whether auditing in turn affects the probability of regulatory inspections. We account for the potential endogeneity of our audit measure and the censoring of our compliance measure using a censored trivariate probit, which we estimate using simulated maximum likelihood. We find that larger facilities and those subject to more stringent regulations are more likely to audit; facilities with poor compliance records are less likely to audit. However, we find no significant long-run impact of auditing on the probability of a regulatory inspection or compliance among these Michigan manufacturing facilities.

(This abstract was borrowed from another version of this item.)

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Bibliographic Info

Article provided by Springer in its journal Journal of Regulatory Economics.

Volume (Year): 40 (2011)
Issue (Month): 3 (December)
Pages: 279-302

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Handle: RePEc:kap:regeco:v:40:y:2011:i:3:p:279-302

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Web page: http://www.springerlink.com/link.asp?id=100298

Related research

Keywords: Environmental auditing; Hazardous waste; Compliance; Enforcement; Q53; Q58; L51;

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References

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Cited by:
  1. Dietrich Earnhart, 2013. "Effect of Systems to Manage Environmental Aspects on Environmental Performance," Sustainability, MDPI, Open Access Journal, vol. 5(6), pages 2557-2588, June.
  2. Lirong Liu & Mary F. Evans & Sarah Stafford, 2012. "Firm Decision-making Structure and Compliance with Environmental Regulations: Evidence from Environmental Auditing," Working Papers 1206, Sam Houston State University, Department of Economics and International Business.

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