Compliance and Corporate Governance: Theoretical analysis of the effectiveness of compliance based on locus of functional responsibility

In this manuscript, we perform a theoretical analysis of compliance reporting structures. The study seeks to further our understanding of corporate governance by examining advantages and disadvantages of positioning the compliance function at various locations within an organizational structure. We consider factors that contribute or detract from the effectiveness of the placement of the compliance function within an organizational framework. We utilize data from eight compliance surveys that provide insights on the current state of compliance, trends for compliance, and measures of effectiveness. Our purpose is to establish a strong theoretical basis on which to build future empirical studies to assess the impact of existing reporting structures on the current levels of ethical breaches, fines, and violations. We suggest implications for practice as well as research.