The impact of information frictions within regulators: evidence from workplace safety violations

Raghunandan, Aneesh ORCID: 0000-0003-0443-4984 and Ruchti, Thomas (2024) The impact of information frictions within regulators: evidence from workplace safety violations. Journal of Accounting Research. ISSN 0021-8456

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Abstract

The Occupational Safety and Health Administration (OSHA) is decentralized, wherein field offices coordinated at the state level undertake inspections. We study whether this structure can lead to interstate frictions in sharing information and how this impacts firms’ compliance with workplace safety laws. We find that firms caught violating in one state subsequently violate less in that state but violate more in other states. Despite this pattern, and in keeping with information frictions, violations in one state do not trigger proactive OSHA inspections in other states. Moreover, firms face lower monetary penalties when subsequent violations occur across state lines, likely due to the lack of documentation necessary to assess severe penalties. Finally, firms are more likely to shift violating behavior into states with greater information frictions. Our findings suggest that internal information within regulators impacts the likelihood and location of corporate misconduct.

Item Type:	Article
Official URL:	https://onlinelibrary.wiley.com/journal/1475679x
Additional Information:	© 2024 The Authors
Divisions:	Accounting
Subjects:	H Social Sciences > HF Commerce > HF5601 Accounting
JEL classification:	J - Labor and Demographic Economics > J8 - Labor Standards: National and International > J81 - Working Conditions M - Business Administration and Business Economics; Marketing; Accounting > M4 - Accounting and Auditing > M41 - Accounting D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D82 - Asymmetric and Private Information J - Labor and Demographic Economics > J8 - Labor Standards: National and International > J83 - Workers' Rights D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D83 - Search; Learning; Information and Knowledge; Communication; Belief
Date Deposited:	15 Mar 2024 17:33
Last Modified:	19 Apr 2024 13:36
URI:	http://eprints.lse.ac.uk/id/eprint/122404

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