Corporate Characteristics and Environmental Noncompliance: Distinguishing "Good" and "Bad" Corporate Citizens

Sally S. Simpson, University of Maryland at College Park
Carole Gibbs, University of Maryland at College Park

ABSTRACT
The most common explanation of corporate offending in the literature is poor economic performance; firms violate the law because it is in their economic interest. However, other literature suggests that the relationship between economic performance and offending may be more complex. Organizational characteristics, such as offending history, size, and single versus multi-site ownership, may also be linked to the likelihood of offending. Further work is necessary to understand the nature of the relationship between these characteristics and firm compliance.

This work will build on existing literature by examining whether corporate characteristics can be used to classify firms into different levels of compliance. Unlike prior research that utilized a broad dependent variable, this work will examine organizational characteristics in relation to environmental water violations in four industries: pulp, paper, oil, and steel. Using organizational data on 61 firms linked to Environmental Protection Agency compliance and enforcement records, this paper will explore whether there are certain characteristics of companies that are associated with differing levels of compliance. Firms will be classified into three categories: those that typically exceed compliance standards; those that typically meet compliance standards; and those that typically fail to meet compliance standards. Implications for enforcement practices will be discussed.

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Updated 05/20/2006