Supervisory Challenges in the Face of Harmful But Legal Corporate Behavior

At least seventeen out of twenty-three Dutch regulatory agencies avert harmful but legal corporate behavior through regulatory interventions beyond the law. Interviewed regulators struggle to position themselves in the ensuing cat-and-mouse game, broker adverse interests, and uphold legitimacy. This paper explores these core challenges, regulators’ supervision strategies to cope with these challenges, as well as factors that may influence their stance. The paper proposes a dual level game viewpoint to interpret the resulting extrajudicial interaction between regulators and firms.