Corporate Lawbreaking and Interactive Compliance: Resolving the Regulation-Deregulation Dichotomy

By Jay A. Sigler; Joseph E. Murphy | Go to book overview

for the global pool of investment capital, it must be willing to make financial disclosures equal to those of American or British corporations, without regard to the fact that such disclosures are not required by its home country. And this is exactly what has occurred. Foreign corporations have been preparing financial statements with excess disclosure--"excess" in the sense that it is well beyond the information required by their native accounting standards. This discretionary compliance with U.S. GAAP not only has been undertaken in their own self-interest, but also is a virtual necessity for their continued survival in an environment of competitive information.

A similar argument can be made in the area of interactive compliance. If a company is rewarded for its participation in the compliance procedure, be it by preference granted in government contracting or by reduced costs in compliance investigations or by superior public relations, then other companies will be forced to enter into interactive compliance or else find themselves at a competitive disadvantage. As currently taught, business policy and strategy courses largely overlook these zones of discretion and the business sense that interactive compliance can make. This should change--to increase interest, to introduce more realism into the decision model, and to explore otherwise ignored alternatives.


CONCLUSION

Business faculty and their students like to think of themselves as being performance-oriented. Unfortunately, this performance orientation is seen quite narrowly as a competition measured crudely by the maximization of profits. Numbers have become both a scoring device and a fixation. What better example of this than the capstone course offered at the end of most business curricula? In many of these Business Policy courses, students "compete" against one another as fictional firms and are ranked according to their respective bottom lines (or, more accurately, by an "index" or number based on the company's profits). Does it matter that their company is a "good" company, that it willingly complies with environmental standards, provides its workers with a safe and healthy work place, or refuses to engage in discriminatory behavior? These factors do not even enter the "game" because they cannot be reduced to a number. They are not part of the scoring system.

For interactive corporate compliance to gain a receptive audience among business faculties and their students, it must become part of the scoring system; it must be shown to increase revenues or reduce costs. If its benefits cannot be expressed in some tangible form (i.e.,

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