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Who Benefits from Stakeholder Consultations? Fire Alarms or Procedural Politicking?

Interest Groups
Parliaments
Public Policy
Regulation
European Parliament
Policy-Making
Rik Joosen
Universiteit Antwerpen
Madalina Busuioc
Vrije Universiteit Amsterdam
Rik Joosen
Universiteit Antwerpen
Benjamin Leidorf-Tidå
Vrije Universiteit Amsterdam

Abstract

By allowing important societal interests to provide input on regulatory proposals, stakeholder consultations supposedly increase the input legitimacy of the regulatory output of non-majoritarian agencies. As such, stakeholder consultations have become increasingly common, to the extent that they are seen as a staple of modern regulatory governance processes. Following these developments, ample scholarly attention has been spent to map and explain stakeholder participation and influence in these processes. Less attention has been paid to the fact that stakeholder consultations might also affect the traditional democratic oversight of regulatory agencies. Following seminal principal-agent arguments of fire alarm oversight, stakeholder consultations could on the one hand alert and activate political principals to take oversight actions. But on the other hand, following more recent arguments related to bureaucratic reputation-building and "procedural politicking", stakeholder consultations may also function to build stakeholder coalitions that discourage oversight by political principals. We test these two competing theories, together with a novel theoretical argument stating that the effect of stakeholder consultations on democratic oversight is conditional on the opinions of concerned stakeholders. We do so with data on stakeholder consultations on regulatory proposals by the three European financial supervisory authorities (EBA, EIOPA, and ESMA) as well as hearings of these agencies in the European Parliament's Committee on Economic and Monetary Affairs (ECON). Our analysis seeks to unpack how stakeholder consultations affect the accountability relationships between regulatory agencies and political principles. Do they function as fire alarms or procedural politicking tools?