In this article, we hypothesize that the level of environmentally oriented noncompliance regulatory fines and penalties levied on companies and on their industry counterparts will be associated with the development of an environmental infrastructure and practices within these companies. We find that the presence of these regulatory actions is associated with the likelihood of companies reporting environmental policies and activities and with the presence of a separate board of directors’ committee that monitors company environmental concerns. Our findings suggest that environmental regulatory pressure may serve as a driver of environmental action but is not its only determinant.
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