Effective Regulation and Firm Compliance: The Case of German Privacy Policies

Jacopo Gambato (), Bernhard Ganglmair () and Julia Krämer ()

CRC TR 224 Discussion Paper Series from University of Bonn and University of Mannheim, Germany

Abstract: This paper explores the interaction between the enforcement of and compliance with difficult-to-enforce rules in the context of data regulation. We focus on the effect of the introduction of the GDPR and its transparency principle on the readability of privacy policies for a large sample of German firms. Germany has a system of statelevel data protection authorities. These data regulators enforce the same rules but face diverse funding situations, allowing for an ideal setting to study the role of a regulator’s capacity in firms’ compliance decisions. We find that while, on average, the GDPR lead to less readable policies, firms active in industries that have in the past received more regulatory scrutiny and those active in jurisdictions of better-funded data regulators exhibit a stronger compliance with the GDPR’s readability requirement. These results exemplify a more general interaction between regulators’ enforcement activity and firms’ regulatory compliance.

Keywords: data protection; GDPR; privacy policies; readability; regulation; text-as-data (search for similar items in EconPapers)
JEL-codes: D22 K20 L51 (search for similar items in EconPapers)
Pages: 22
Date: 2025-03
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Related works:
Chapter: Effective Regulation and Firm Compliance: The Case of German Privacy Policies (2024)
Working Paper: Effective Regulation and Firm Compliance: The Case of German Privacy Policies (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:bon:boncrc:crctr224_2025_659

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