Defensive Compliance in Corporate Criminal Justice: Effects of Compliance Programs on Organizational Prosecution and Punishment

• In Event: Roundtable: The Criminology of Regulation

Abstract

Business organizations have increasingly developed compliance strategies in response to heightened regulatory requirements. Over the past few decades, the US criminal justice system has embraced a compliance-based approach to regulating organizational criminality and promulgated criminal laws and policies regarding corporate prosecution and punishment. While a significant body of research has investigated the impacts of compliance programs in curbing unethical behavior and enhancing corporate governance, it often overlooks the defensive nature of compliance and its proactive role in legal risk management. This paper assesses whether existing compliance programs protect organizational offenders against criminal liabilities in prosecutorial and sentencing decisions. Analyses of the US Sentencing Commission 2011-2022 organizational offender data show that organizations’ compliance programs exhibit only limited effects in defending against criminal liabilities and mitigating penalties. Their impacts are primarily confined to reducing the number of charges and shortening the length of imposed probation. Publicly traded companies with established compliance programs benefit from a lower offense level but paradoxically face a significantly reduced likelihood of obtaining downward departure during sentencing. The defensive effect of these programs does not manifest in ultimate sentencing outcomes. The findings illustrate the limited function of defensive compliance in shielding criminal liabilities for business organizations once charges are pressed, contrary to the optimistic portrayal by compliance professionals. Future research should continue to pursue this line of inquiry to investigate the contingency of defensive compliance upon policy changes and its broader impacts on decriminalization and non-criminal liabilities.

Author

• Li Huang, University of California, Irvine