Resource and Energy Economics 44 (2016) 1–22 Contents lists available at ScienceDirect Resource and Energy Economics j ournal homepage: www.elsevier.com/locate/ree Environmental audits and signaling: The role of firm organizational structure Dietrich Earnhart a,∗ , J. Mark Leonard b a University of Kansas, Department of Economics, 436 Snow Hall, Lawrence, KS 66045, United States b American University in Bulgaria, 1 Georgi Izmirliev Square, Blagoevgrad, Bulgaria a r t i c l e i n f o Article history: Received 8 April 2013 Received in revised form 21 December 2015 Accepted 3 January 2016 Available online 9 January 2016 Keywords: Audits Firm Organizational structure Wastewater a b s t r a c t This study examines the extent of environmental management practiced by U.S. chemical manufacturing facilities, as measured by the number of environmental internal audits conducted by facil- ities annually. In particular, this study focuses on the effects of firm-level organizational structure on facility-level environmen- tal management practices. For its theoretical analysis, the study employs the framework of signaling, including both signals sent to customers and signals sent to regulators. For its empirical analysis, the study exploits unique data gathered by a survey distributed to all U.S. chemical manufacturing permitted to discharge wastewater as of 2001; the survey data provide information on audits con- ducted annually between the years 1999 and 2001. As one example, empirical results reveal a difference in auditing behavior based on whether facilities are owned by firms operating within a single state or multiple states. © 2016 Elsevier B.V. All rights reserved. 1. Introduction Voluntary environmental behavior has received recent attention by economic research (e.g., Innes and Sam, 2008; Tambunlertchai et al., 2013; Bluffstone and Sterner, 2006; Ervin et al., 2012; Leonard and Decker, 2012). This literature improves our understanding of the motivations and impediments ∗ Corresponding author. Tel.: +785-864-2866; fax: +1 785 864 5270. E-mail addresses: Earnhart@ku.edu (D. Earnhart), mleonard@aubg.bg (J. Mark Leonard). http://dx.doi.org/10.1016/j.reseneeco.2016.01.002 0928-7655/© 2016 Elsevier B.V. All rights reserved.