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Dr. Allen Huang
Associate Professor in Accounting
Associate Dean, School of Business and Management (Undergraduate Programs)
The Hong Kong University of Science and Technology

This study investigates the effects of regulatory enforcement disclosures using a regression discontinuity design based on Occupational Safety and Health Administration (OSHA)’s press release policy for safety violations. We find that the disclosure of regulatory enforcement induces firms that operate facilities nearby the sanctioned facility to increase safety investments, which occurs not only in the region where the sanctioned facility resides but also in subsidiaries located in other areas. Results from cross-sectional analyses are consistent with firms’ intra-firm information transfer among employees raising their safety awareness being a possible mechanism. Furthermore, we find an unintended consequence of regulatory enforcement disclosures that they lead to firms’ higher non-compliance with other regulations, namely environmental violations, which is likely driven by within-firm resource reallocation. Overall, our results suggest that regulatory enforcement disclosures have a widespread deterrence effect but may reduce compliance with other regulations.