Do Environmental Audits Improve Long-term Compliance? Evidence from Manufacturing Facilities in Michigan

Mary Evans, Lirong Liu () and Sarah Stafford ()
Additional contact information
Lirong Liu: Department of Economics and International Business, Sam Houston State University
Sarah Stafford: Department of Economics, College of William and Mary

No 78, Working Papers from Department of Economics, College of William and Mary

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.

Keywords: environmental auditing; hazardous waste; compliance; enforcement (search for similar items in EconPapers)
JEL-codes: L51 Q53 Q58 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2008-09-25, Revised 2011-09-25
New Economics Papers: this item is included in nep-agr, nep-env and nep-law
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

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Journal Article: Do environmental audits improve long-term compliance? Evidence from manufacturing facilities in Michigan (2011)
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