109 Iowa L. Rev. 541 (2024)
Abstract
Depending on who you ask, corporate compliance is either the most valuable initiative a company can invest in, or simply a type of insurance policy purchased to avoid legal liability. This divergence is problematic because it leaves the compliance community—companies, regulators, compliance scholars—guessing as to whether and how much should be invested in compliance programs. There are two reasons for this ideological disagreement. One is that most compliance scholarship has thinly defined value, focusing on how compliance programs save companies money through legal liability avoidance or by generally improving corporate culture that will result in far off and ill-defined corporate benefits. The other is that when there have been attempts to measure the value of corporate compliance, they have largely suffered from a lack of empirical rigor. This Article seeks to address both deficiencies. First, we provide a more robust concept of corporate compliance value by focusing on how compliance can provide the potential for increased consumer sales revenue, a metric business leaders and regulators can easily understand and internalize. Second, by utilizing a validated statistical method called choice-based conjoint analysis, we directly and rigorously measure the revenue generation value of corporate compliance programs. This Article is the first to provide empirically sound, direct evidence that corporate compliance can create positive revenue enhancing value for companies. This more complete conception and measurement of compliance value has important implications for corporate stakeholders, including managers who design and implement compliance programs, regulators who monitor and enforce such programs, and legal scholars who research optimal compliance policy.