Graduation Semester and Year
Spring 2025
Language
English
Document Type
Dissertation
Degree Name
Doctor of Philosophy in Accounting
Department
Accounting
First Advisor
Ramgopal Venkataraman
Second Advisor
Nandu J. Nagarajan
Third Advisor
Mahmut Yasar
Abstract
Economic theory suggests that firms comply with regulations when the expected costs of noncompliance outweigh the expected benefits (Becker 1968). Despite minimal enforcement, weak penalties, and strong incentives for noncompliance, some firms comply with the provisions of the Worker Adjustment and Retraining Notification (WARN) Act, which mandates advance notice of mass layoffs and plant closings. Using a sample of 7,084 firm-years necessitating WARN Act disclosures from 2000 to 2020, I reassess the cost-benefit calculus by first demonstrating that wage theft violations provide the incentives necessary to compel firms to comply with other minimally enforced laws like WARN. Next, I find that firms with either prior wage theft violations or a high likelihood of future infractions are more likely to issue WARN notices, consistent with firms reassessing their compliance decisions as their violation profile changes in anticipation of future wage theft. Furthermore, the role of legal expertise in this decision-making process is nuanced: while firms with prominent general counsel are, on average, less likely to comply with the WARN Act, this relationship reverses when prior wage violations or high likelihood of future infractions exist, suggesting that legal expertise can act as a mitigation mechanism in the presence of heightened regulatory exposure. These findings present novel evidence on the interactive effect of regulations and how reputational effects can serve as an indirect cost of non-compliance for regulations that prima facie are weakly enforced. My research also highlights the critical role of legal counsel in shaping adherence to minimally enforced labor regulations that have meaningful consequences for workers.
Keywords
Wage Theft, WARN Act Compliance, Regulatory Spillovers, General Counsel Influence, Labor Law Enforcement
Disciplines
Accounting
License
This work is licensed under a Creative Commons Attribution 4.0 International License.
Recommended Citation
Gonzales, Roberto, "Navigating Compliance: How Wage Theft Influences WARN Act Decisions" (2025). Accounting Dissertations. 51.
https://mavmatrix.uta.edu/accounting_dissertations/51