This paper investigates the moderating role of industry regulation on the effectiveness of audit committees in restricting earnings management. Using comprehensive panel data of S&P 1500 firms between 2003 and 2007, we find that the proportion of CEO directors on an audit committee is positively associated with earnings management in unregulated industries, while this association is significantly weaker in regulated industries. Further, the proportion of financial experts on an audit committee is negatively associated with earnings management. Our results (...) also indicate that the average board tenure of audit committee members is negatively related to earnings management in regulated industries, but positively affects earnings management in unregulated industries. Finally, audit committee members’ average directorship increases earnings management in regulated industries, but reduces earnings management in unregulated industries. Overall, our results suggest that the effectiveness of audit committees in reducing earnings management and improving financial reporting quality is influenced by industry regulation. (shrink)

The Goldschmidt Hypothesis posits that rural community welfare is negatively associated with the scale of farms surrounding them. The intervening mechanism that links a farm structure dominated by larger farms to negative rural community welfare outcomes is polarized class structure. There have been a number of studies that have found support for the basic relationship between increasing farm scale and negative rural community outcomes. However, since Walter Goldschmidt’s original study was completed in the 1940s, the agricultural market and farming structures (...) have changed dramatically. Market structure is now more differentiated than in previous decades. Vertical and horizontal integration, contract production, organic and other specialty markets, and direct marketing are examples of new marketing forms that have emerged over the past few decades. In addition, as farm and market structure have shifted, some states have enacted public policy to forestall negative outcomes related to the industrialization of agriculture. Previous studies which measured the effects on rural community welfare from the structure of the surrounding farming sector have been valuable contributions to the development of the sociology of agriculture and have led to increased understanding of agriculture and rural development. However, a new generation of studies should be undertaken to address the impacts of changing market structure as well as assess public policy attempts to mitigate negative impacts of agricultural industrialization. To that end I present a discussion of conceptual and methodological issues related to such a research program. And I offer a conceptual model intended to be useful in guiding future research in this area. (shrink)

This paper examines public conflict over the rapid growth of the Tasmanian salmon aquaculture industry and associated environmental and social impacts. By conducting a media analysis, triangulated...

Industry-sponsored biomedical research is under the microscope. In an attempt to achieve just results in extraordinary cases, critics are suggesting regulations that would pervert the U.S. clinical trial process. However, the arguments made to justify such regulation are weak at best. All the proposals to regulate industry sponsorship of clinical trials that we surveyed suffer from some form of fallacious reasoning. In the interest of advocating sound policy, this article points out some of the most common reasoning (...) errors found in the literature on financial conflicts of interest in clinical trials. (shrink)

Increasingly, taxonomies are being developed and used by industry practitioners to facilitate information interoperability and retrieval. Within a single industrial domain, there exist many taxonomies that are intended for different applications. Industry specific taxonomies often represent the vocabularies that are commonly used by the practitioners. Their jobs are multi-faceted, which include checking for code and regulatory compliance. As such, it will be very desirable if industry practitioners are able to easily locate and browse regulations of interest. In (...) practice, multiple sources of government regulations exist and they are often organized and classified by the needs of the issuing agencies that enforce them rather than the needs of the communities that use them. One way to bridge these two distinct needs is to develop methods and tools that enable practitioners to browse and retrieve government regulations using their own terms and vocabularies, for example, via existing industry taxonomies. The mapping from a single taxonomy to a single regulation is a trivial keyword matching task. We examine a relatedness analysis approach for mapping a single taxonomy to multiple regulations. We then present an approach for mapping multiple taxonomies to a single regulation by measuring the relatedness of concepts. Cosine similarity, Jaccard coefficient and market basket analysis are used to measure the semantic relatedness between concepts from two different taxonomies. Preliminary evaluations of the three relatedness analysis measures are performed using examples from the civil engineering and building industry. These examples illustrate the potential benefits of regulatory usage from the mapping between various taxonomies and regulations. (shrink)

There is no doubt that industry-sponsored biomedical research is under the microscope. Unfortunately, this new era of skepticism prematurely rushes in doubts of the ethos of science. Skepticism can lead to positive changes, but only when timely and supported by sound reasoning. Snapshot views and theories, especially those that result in costly new regulations and inefficient policies often do more harm than good. Many critics would have the reader doubt scientific integrity because they believe that the relationship between the (...) pharmaceutical industry and biomedical research poses an unavoidable and dangerous conflict of interest. However, these conflicts are neither unavoidable nor dangerous per se. (shrink)

Regulating clinical trials for testing new drugs is fraught with risk. Misregulation can slow development of innovative and useful new drugs, but in other ways misregulation can foster trials that are inefficient and unethical, driven by commercial rather than scientific ends, and that can harm patients. In this paper, we argue not for more but for better regulation, based on the goal of rapidly producing innovative and safe products that represent significant advances in medical care. Data on industry-funded, (...) late-stage clinical trials demonstrate an urgent need for dramatic changes in how these trials are designed, conducted, and analyzed. On the one hand, current patent rules can dissuade development of innovative new products with smaller markets and press trial designers to create positive results too rapidly. But at the same time, numerous studies show that when the pharmaceutical industry sponsors clinical trials, the results are systematically biased in favor of the sponsor's product, often to the detriment of patients and the public. The reasons for this bias are both complex and unavoidable, and the ways in which clinical trial design, conduct, and reporting can be inappropriately influenced are so varied and nuanced, that efforts to manage this conflict of interest and prevent harms are inevitably unsuccessful. Instead, we conclude such conflict should be avoided and a strong firewall should exist between drug developers and the final stages of clinical testing in humans. All financial support for phase III clinical trials should pass through a public-private partnership organization — perhaps tied to a broader clinical effectiveness research enterprise — which would be charged with designing, funding, and monitoring late-stage human clinical trials of new pharmaceutical products. (shrink)

Because of China’s tremendous increase in foreign direct investment over the past two decades, this method of internationalization has become increasingly significant for companies worldwide. Heavy industry’s dominant role in China’s industrial structure must be modernized to ensure the country’s long-term growth and prosperity. There are 30 provinces in China covered by this dataset, which dates back from 2005 to 2018. Augmented mean group and common correlated effects mean groups estimations demonstrate that China’s industrial upgrading and resource allocation considerably (...) impact FDI inflows. The findings show that FDI inflows appear to be negatively affected by environmental rules. The results show that industrial upgradation and environmental regulations have not had the expected effect on FDI in China without the participation of other stakeholders. For the selected panel, the results from the control variable show that population aging reduces foreign direct investment inflows, whereas, economic growth increases FDI inflows. According to our findings and those of the empirical study, we make some policy proposals to help Chinese provinces attract more foreign direct investment by encouraging and upgrading the screening of such investments. (shrink)

There is an old saw in health policy that everyone wants health care that is good, fast, and cheap — but it’s impossible to have more than two of these at one time.A similar bit of folk wisdom seems intuitively true for the development and testing of new pharmaceutical products. The public is in a bind. We want breakthrough drugs, and fast. But we also want these drugs to be affordable, thoroughly tested, safe, and effective. It seems we can’t have (...) it all.In this paper, we will not claim that one can have it all — but that we can do far better than we are at present. First, we review extensive data on contemporary problems in the design, conduct, and analysis of industry-sponsored clinical trials. Finding major issues that have been solidly documented over more than a decade, we provide many examples of the multifarious ways in which industry-funded trials have been manipulated to raise the likelihood of producing industry-friendly results. (shrink)

Self-regulation exists at the firm-level, the industry-level, and the business-level of economic organization. Industry self-regulation has faced economic (free rider) and legal (antitrust) impediments to widespread implementation, although there exist examples of effective industry self-regulation, e.g., securities industry and the SEC, advertising and the FTC. By instituting industry codes of conduct, national trade associations have shown to be natural vehicles for self-regulation. While there has been long-standing general encouragement for establishing (...) class='Hi'>industry codes, adopting and enforcing conduct codes has been seriously circumscribed by restrictive Supreme Court decisions and FTC advisory opinions. One approach to clearing legal confusion is to petition the FTC to issue an industry guide on promulgating and enforcing trade association codes of conduct. Another strategy is to utilize a stakeholder approach to association ethics committee appointments that subsequently influence code creation and enforcement. Finally, a new concept of an industry code of conduct will consist of three subcodes: an economic code; an environmental code; and a socio-political code. Combined, these strategic approaches will offer new opportunities for effective nonmarket regulation. (shrink)

Considering recent theoretical discussions about the concept of moral legitimacy, this study advances our understanding of its performance consequences. Specifically, it uncovers the mediating role of moral legitimacy in the relationship between regulations and industry performance. Our analysis of the U.S. state-level data on regulations in a controversial industry between 1994 and 2010 yields four significant findings. The results show that regulations not only decrease performance but also negatively impact moral legitimacy. Moreover, this study provides empirical evidence that (...) moral legitimacy is positively related to industry performance, providing much-needed direct support for this premise. Importantly, the results indicate that moral legitimacy mediates the effect of regulations on performance, but only when regulations are aligned with moral values. Overall, this study extends our understanding of how regulations influence moral legitimacy, and in turn impact industry performance. (shrink)

This paper discusses strategic decision making in firms pursuing biotechnology innovation and the influence of risk regulation on firm strategy. Data from three research projects, involving interviews with over 60 managers from agricultural and food related biotechnology companies and also over 60 key participants in the regulatory process in the UK and EC, shows a diversity of strategy and opinion. While some industry representatives identified new risk regulations governing the release of genetically manipulated organisms (GMOs) as the primary (...) constraint on biotechnology innovation, the findings of the study painted a more complex picture. The controversies surrounding the issue of risk regulation and its impact on innovation are best understood if viewed in the context of other political and economic factors. We conclude that the actual impact of risk regulation on industry strategies is probably less than the rhetoric of industry lobbyists would suggest. At the same time, the very act of lobbying so forcefully could lead to a public backlash against industry that would be much more damaging than the regulation itself. (shrink)

The purpose of this paper is to identify the paradoxes of industry self-regulation and to draw parallels between recent work on collaboration with the notion of control and regulation. Various examples of collaborative control are identified and self-regulation is used to illustrate how the process happens. Suggestions are offered on how collaboration is necessary for future regulatory issues.

When is industry self-regulation (ISR) a legitimate form of governance? In principle, ISR can serve the interests of participating companies, regulators and other stakeholders. However, in practice, empirical evidence shows that ISR schemes often under-perform, leading to criticism that such schemes are tantamount to firms marking their own homework. In response, this paper explains how current management theory on ISR has failed to separate the pragmatic legitimacy of ISR based on self-interested calculations, from moral legitimacy based on normative (...) approval. The paper traces three families of management theory on ISR and uses these to map the pragmatic and moral legitimacy of ISR schemes. It identifies tensions between the pragmatic and moral legitimacy of ISR schemes, which the current ISR literature does not address, and draws implications for the future theory and practice of ISR. (shrink)

Industry analysts estimate that Internet pharmacies will generate $1.4 billion in prescription drug sales by 2001 and over $15 billion by 2004. The recent rush by traditional brick and mortar pharmacies either to partner with existing Internet pharmacies or to create their own web counterparts illustrates the increasing importance of business on the Internet. Last summer, retail pharmacy giant CVS acquired the Internet pharmacy soma.com and changed its name to reflect the new ownership. Early this year, in another key (...) industry move, Walgreen's launched an upgraded, full-service Internet pharmacy in order to compete more successfully in the pharmacy industry. (shrink)

Industry analysts estimate that Internet pharmacies will generate $1.4 billion in prescription drug sales by 2001 and over $15 billion by 2004. The recent rush by traditional brick and mortar pharmacies either to partner with existing Internet pharmacies or to create their own web counterparts illustrates the increasing importance of business on the Internet. Last summer, retail pharmacy giant CVS acquired the Internet pharmacy soma.com and changed its name to reflect the new ownership. Early this year, in another key (...) industry move, Walgreen's launched an upgraded, full-service Internet pharmacy in order to compete more successfully in the pharmacy industry. (shrink)

In 1986, President Reagan created the Packard Commission, a blue-ribbon commission to investigate defense contracting procurement fraud. The Packard Commission''s major recommendation was for defense contractors to adopt ethics programs. Out of this recommendation emerged the Defense Industry Initiative (DII). This paper examines this Initiative and focuses on the DII''s six principles. In particular, this paper explores the implications the DII has had with respect to (1) pursuing intra-industry cooperation and setting industry-wide standards; (2) monitoring compliance; (3) (...) the paradox inherent to the DII as a facilitator for industry self-regulation; and, (4) why companies have enthusiastically adopted the directive. This paper concludes that the DII falls short of being an effective method of self-regulation because: (1) it does not achieve complete industry-wide cooperation; (2) it does not establish uniform standards of ethical conduct within the industry; (3) it does not hold the signatory companies accountable for creating a strong system of ethical conduct; and, (4) it does not relieve the organizational and market pressures to be unethical. (shrink)

Contemporary regulation of food safety incorporates principles of quality management and systemic performance objectives that used to characterize private standards. Conversely, private standards are covering ground that used to be the realm of regulation. The nature of the two is becoming increasingly indistinguishable. The case study of the Ugandan fish export industry highlights how management methods borrowed from private standards can be applied to public regulation to achieve seemingly conflicting objectives. In the late 1990s, the EU (...) imposed repeated bans on fish imported from Uganda on the basis of food safety concerns. However, the EU did not provide scientific proof that the fish were actually “unsafe.” Rather, the poor performance of Uganda’s regulatory and monitoring system was used as justification. Only by fixing “the system” and performing the ritual of laboratory testing for all consignments for export to the EU did the Ugandan industry regain its status as a “safe” source of fish. Yet, gaps and inconsistencies abound in the current Ugandan fish safety management system. Some operations are by necessity carried out as “rituals of verification.” Given the importance of microbiological tests and laboratories in the compliance system, “alchemic rituals” provide an appropriate metaphor. These rituals are part and parcel of a model that reassures the EU fish-eating public that all is under control in Uganda from boat to point of export. As a consequence, actual non-compliance from boat to landing site allows the fishery to survive as an artisanal operation. (shrink)

ArgumentWe expand upon the notion of the “credibility cycle” through a study of credibility engineering by the food industry. Research and development (R&D) as well as marketing contribute to the credibility of the food company Unilever and its claims. Innovation encompasses the development, marketing, and sales of products. These are directed towards three distinct audiences: scientific peers, regulators, and consumers. R&D uses scientific articles to create credit for itself amongst peers and regulators. These articles are used to support health (...) claims on products. However, R&D, regulation, and marketing are not separate realms. A single strategy of credibility engineering connects health claims to a specific public through linking that public to a health issue and a food product. (shrink)

Research on the influence of industry on chemical regulation has mostly been conducted within the framework of the production of ignorance. This special issue extends this research by looking at how industry asserts its interests––not just in the scientific sphere but also at other stages of policy-making and regulatory process––with a specific focus on the types of tools or instruments industry has used. Bringing together sociologists and historians specialized in Science and Technology Studies, the articles of (...) the special issue study the arenas in which instruments and practical guidelines for public policy are negotiated or used. The aim is to observe the devices in the making or in action, from the selection of actors to the production of thresholds, criteria, and other technical regulations. The introduction highlights how industry influence on expertise and regulation is undoubtedly far more pervasive and multifarious than has been conceptualized to date by social scientists. Putting this issue back at the heart of both the STS and social sciences research agendas is increasingly urgent and could lead to new inquiries able to highlight these logics even more widely, using fresh empirical examples. (shrink)

In recent years, there has been increasing managerial and academic attention given to a variety of mechanisms for companies to respond to stakeholder concerns about global business ethics. One area that merits further analysis is the role of industry‐level cooperation regarding issues in global business ethics such as labor practices. There are two main issues that we will address in this article: institutional pressures that predict when an industry will create a code of conduct and institutional complements for (...) an industry‐level code of conduct to be “successful” with regard to responding to stakeholder concerns about international business operations. We offer a number of propositions—bringing together work from both the corporate social responsibility and (neo)institutional theory literatures—with regard to both predictors and complements of industry self‐regulation in reference to labor practices. (shrink)

Large mining projects can generate highly inequitable outcomes, with affected communities bearing the burden of social and environmental costs while economic benefits accrue largely to domestic and foreign metropolitan centres. This raises important ethical and social justice issues, as does the finite nature of mineral resources, which can mean that current generations enjoy the benefits of mining while future generations bear the costs of environmental and social impacts that can continue long after mining ends. During recent decades two broad approaches, (...) voluntary industry initiatives and government regulation, have been employed in attempts to achieve a more equitable distribution of mining’s positive and negative effects. Both have serious drawbacks. Industry initiatives are ultimately voluntary and may be abandoned in tough economic times; they can be highly variable across companies and projects; and they suffer from serious compliance issues. Public regulation can be inflexible, is subject to industry capture, and in many major mineral producing nations a ‘retreat from regulation’ is reducing its relevance. This article considers whether, and under what conditions, a third and emergent instrument, community development agreements, can help overcome the shortcomings associated with industry initiatives and public regulation. It argues that CDAs have considerable potential in this regard, but that communities can encounter significant practical challenges in their negotiation and implementation. In addition, disparities in negotiation power between communities and project developers can result in inequitable agreements, indicating a continued need for government involvement to create a more level ‘negotiation terrain’. (shrink)

This article documents the response of cooperative institutions that were required to adhere to new capital adequacy regulations traditionally geared for profit-maximising organisations. Using data from the Australian credit union industry, we demonstrate that the cooperative philosophy and internal corporate governance structure of cooperatives will lead management to increase capital adequacy ratios through the application of accounting window dressing techniques. This is opposite to the intended purpose of template regulation aimed at efficiently increasing operating margins and lowering risk. (...) Our results raise several debatable issues regarding the ethics of accounting management and the imposition of one-shoe-fits-all external regulation. (shrink)

Policyholders and other claimants in insurance companies are interested in solidity, i.e., the ability of insurers to meet their claims obligations in both the short run and the long run. Insurance regulators exist in order to represent the interests of consumers. Great emphasis is placed by the regulators of the market on the mandatory and uniform disclosure of relevant financial and operating aspects of insurers. This paper employs simple gametheoretic techniques to address two aspects of the general issue of the (...) desirability of establishing a regulator to assess the solidity of insurers. First, why would uniform information about insurers be desirable? Given that uniformity is desirable, it could be achieved by voluntary agreement of insurers or via regulation. The second issue is how that uniformity is to be achieved; that is, what is the value of a regulator in achieving uniformity? Insurance provides an interesting instance of the general problem. A key determinant is the structure of costs and benefits of securing voluntary agreements across firms. (shrink)

Happy cow messages are instances of commercial speech by the animal industry which, by action or by omission, mislead consumers about the harmful effects that the industry has for nonhuman animals, the environment, or human health. Despite their ubiquity, happy cow messages have received little philosophical scrutiny. This paper aims to call attention to this form of speech, and to make the case for its restriction. To do so we first conceptualize happy cow messages. Second, we argue that (...) they encroach upon individual autonomy in two particularly objectionable ways: by impairing our ability to behave according to our moral convictions, and by thwarting our capacity to identify and reason about our moral duties. This, we hold, grounds a pro tanto case for stricter and more comprehensive regulations of commercial speech by the animal industry. Third, and against the objection that restricting happy cow messages would violate freedom of speech, we contend that none of the most influential arguments for free speech grants them protection. Indeed, we suggest, those rationales seem to call for their restriction. Fourth, and finally, we review some possible ways to defuse the misleading potential of happy cow messages through commercial speech regulations. (shrink)

PurposeThe purpose of this paper is to present a preliminary analysis of age and gender across a number of questions asked in a survey of ethical attitudes of professionals in the information and communication technology industry in Australia. While a large number of demographic questions regarding ethics and regulation, only those concerning age and gender are examined here.Design/methodology/approachAn online survey was conducted of the ICT workplace in Australia. The results were analyzed using SPSS.FindingsThere are some significant differences across (...) the generations as well between the genders. Gen Y is different when compared to the others on how important ethical regulations ought to be. Gen Y thinks that ethical regulations ought to be less important. When gender was examined it was clear that males thought that ethical regulations ought to be significantly less important when compared with what females thought.Research limitations/implicationsWhile a larger sample size was desired, the consistency of the replies, when compared against a number of comparative populations, indicated that the replies we received were representative of the ICT workforce.Originality/valueThis paper raises many issues that demand greater care and attention be given when constructing new models of governing ethics within the Australian ICT workplace. (shrink)

This study is focused on unsustainable agri-food systems, especially intensive livestock farming and its resulting environmental harms. Specifically we focus on the development of technologies that seek to mitigate these environmental harms. These technologies are generally developed as incremental innovations in response to government regulation. Critics of these technological solutions allege that these developments legitimate unsustainable food production systems and are incapable of supporting agri-food systems transformation. At the same time, technology developers and other actors seek to present these (...) technologies as the legitimate solution to agri-environmental harms. Our study seeks to explore the perceptions and constructions of legitimacy for technologies that are developed to reduce ammonia emissions in intensive livestock farming in Flanders (Belgium). We use a qualitative case study, employing semi-structured interviews and workshops, with technology developers of ammonia-emission reducing technologies and stakeholders in the intensive livestock farming industry in Flanders. What our study shows is that technologies developed to reduce emissions are dependent on regulative legitimacy. The normative and cognitive legitimacy of these technologies is lacking, both due to ties to the intensive livestock industry and due to uncertainty over the performance of these technologies. With the delegitimation of intensive livestock farming, the legitimacy of these technologies is also under threat. In response, technology developers are looking to (re-)construct this legitimacy through knowledge claims over the performance of their technologies. We show several ways for other actors to deal with this, centred on either re-legitimising technologies to maintain the status quo, or to contest these knowledge claims and use them to disrupt path dependencies. (shrink)

This chapter contains sections titled: The Stricter‐Law Argument Learning from History Objections to the Stricter‐Law Argument An Interim Solution? Putting the Pieces Together.

Industry groups engage in venue shifting when they seek to overturn or alter restrictive regulations imposed by one political venue through another. A critical step in this process is resolving uncertainties surrounding the preference of the targeted venue and the nature of the relevant policy proposal. While existing studies emphasize a long-term trial-and-error process of policy learning, we focus on nascent industries and argue that ventures seek other information sources to resolve these uncertainties quickly. In particular, nascent industry (...) groups are likely to perceive that the targeted venue will support their policy proposal if the targeted venue is ideologically distant from the venue that has enacted the restrictive regulations, if the targeted venue has recently supported other nascent industry groups’ similar policy proposals, or if the industry groups themselves are more exposed to industry peers’ success in promoting the same policy proposal in other jurisdictions. Under these conditions, the industry groups invest more to influence the targeted venue in response to restrictive regulations enacted by other venues. We find support for our theory by examining how from 2013 to 2019 the small unmanned aircraft systems industry trade associations in the United States lobbied state governments to nullify local regulations. (shrink)

The aim of the study was to explore the effects of the Responsible Care (RC) programme and how it is applied in practice. The present research questions include the following focus: how should we assess the performance of an organization's RC activity and what are the different criteria for assessing RC practices? The results indicate that the RC programme provides practical tools for developing health, environmental and safety operations. RC companies are committed to developing their products and processes, and continuously (...) strive to minimize emission levels and improve the efficiency of their use of raw materials and energy. The RC partnership between the chemical industry and its customers is executed in the form of responsibility for the product and its safe use. The product stewardship approach provides companies with tools that help secure safe usage throughout the product life cycle. (shrink)

The aim of the study was to explore the effects of the Responsible Care programme and how it is applied in practice. The present research questions include the following focus: how should we assess the performance of an organization's RC activity and what are the different criteria for assessing RC practices? The results indicate that the RC programme provides practical tools for developing health, environmental and safety operations. RC companies are committed to developing their products and processes, and continuously strive (...) to minimize emission levels and improve the efficiency of their use of raw materials and energy. The RC partnership between the chemical industry and its customers is executed in the form of responsibility for the product and its safe use. The product stewardship approach provides companies with tools that help secure safe usage throughout the product life cycle. (shrink)

In many countries throughout the world, regulators are struggling to determine whether and how to introduce competition into regulated industries. This essay exam- ines the complexities involved in the liberalization process. While stressing the impor- tance of case-specific analyses, this essay distinguishes liberalization policies that generally are procompetitive from corresponding anticompetitive liberalization policies.

This essay provides a rationale for a regulated market for human oocytes. Although the commodification of human oocytes raises important moral concerns, these concerns do not justify laws banning commerce in human eggs. Given the burgeoning ART industry and the growing oocyte market, the most prudent course of action is to develop regulations for the human oocyte market that are designed to protect and promote important social values, such as health, safety, liberty, and respect for human life. Other responses, (...) such as banning the sale of eggs altogether or allowing donors to be compensated only for their services, would either create a black market or would lead to corruption and abuse. Society still needs to debate specific rules and policies that should govern the human egg market, but further discussion of that important task is best left to legislative bodies and other commentators. (shrink)