Corporate Compliance
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Corporate Compliance

New Approaches to Regulatory Enforcement

Sharon Oded

This book considers how a regulatory enforcement policy should be designed to efficiently induce proactive corporate compliance. It first explores two major schools of thought regarding law enforcement, both the deterrence and cooperative approaches, and shows that neither of these represents an optimal regulatory enforcement paradigm from a social welfare perspective. It provides a critical analysis of recent developments in US Federal corporate liability regimes, and proposes a generic framework that better tailors sanction schemes and monitoring systems to regulatee performance. The proposed framework efficiently induces corporate proactive compliance, while maintaining an optimal level of deterrence.
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Chapter 3: Cooperative enforcement

New Approaches to Regulatory Enforcement

Sharon Oded


Having sketched the layout of the deterrence-based enforcement school of thought in Chapter 2, this chapter focuses on an alternative approach to law enforcement – commonly referred to as cooperative enforcement. The cooperative approach was developed by behavioral scholars as an alternative paradigm to the deterrence-based one. In discussing this alternative approach, I start by presenting its fundamental premises (Section 3.2), while paying particular attention to a key element of this approach, i.e., regulatory cooperation (Section 3.3). I then explore some policy implications of the cooperative enforcement approach by discussing various regulatory enforcement regimes developed based on the cooperative enforcement philosophy (Section 3.4). Having explored various cooperative enforcement regimes, I go on in the following section to discuss the pitfalls of the cooperative enforcement approach (Section 3.5). Finally, I summarize and conclude this chapter in Section 3.6.

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