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Compliance Is the Bridge to Better Regulatory Outcomes

February 26, 2024

Professor Cary Coglianese seated at a table, speaking
Cary Coglianese, Edward B. Shils Professor of Law and Professor of Political Science

Prof. Cary Coglianese writes, “Analyzing and improving compliance is the key to strengthening regulators’ performance.”

At The Regulatory Review, Cary Coglianese, Edward B. Shils Professor of Law and Professor of Political Science, explains his three-step model of effective regulation, which situates corporate compliance in the middle.

This piece draws on Coglianese’s longer work, “Building Better Compliance,” which was published in the Texas Law Review Online and discusses how regulators can incorporate advances in digital technology to aid data collection, improve monitoring, and gather feedback.

From The Regulatory Review:

Despite the integral role that corporations play in providing the goods and services that society needs, corporate incentives do not always align fully with the interests of the overall public. When these so-called market failures arise, regulation is needed. But just adopting a regulation will not guarantee that regulatory problems are solved. Regulations will only work if they influence corporate behavior so that it aligns better with society’s overall well-being.

As I explain in a longer article, if regulation is to be effective, it must proceed through three fundamental steps, with corporate compliance situated in the middle—as a bridge, if you will, between the first and last steps.

First, the government must take action by adopting regulations and then pursuing enforcement and other compliance-oriented activities. Second, these governmental actions must induce changes in the behavior of the entities that regulation targets—ideally, changed behavior through compliance with the rules. Finally, this changed behavior must result in improved conditions in the world, such as by reducing bank failures, fraudulent transactions, harmful environmental emissions, workplace accidents, and other regulatory problems.

In this simple, three-step model of effective regulation, what ultimately matters for society are the outcomes realized at the final step… . 

Coglianese, Director of the Penn Program on Regulation (PPR), is a globally renowned expert on regulatory law, analysis, and management who has produced extensive action-oriented research and scholarship. He has consulted with regulatory organizations around the world and is a founding editor of the peer-reviewed journal Regulation & Governance. He also created and continues to serve as the faculty advisor to the PPR’s flagship publication, The Regulatory Review.

Additional relevant scholarship by Coglianese includes:

Read Coglianese’s full piece at The Regulatory Review.

Read more of Coglianese’s work on compliance.