Bribes and Firm Value

Research output: Contribution to journalArticlepeer-review

Abstract

I exploit the passage of the U.K. Bribery Act 2010 as a shock to U.K. firms' cost of doing business. Around the Act's passage, U.K. firms operating in high-corruption countries experience a drop in firm value, while their non-U.K. competitors in these countries encounter an increase. U.K. firms respond to the Act by reducing the expansion of their subsidiary network into perceptively corrupt countries. Moreover, their sales and merger and acquisition (M&A) activity in such countries declines. In sum, bribes facilitate doing business in certain countries. Imposing unilateral antibribery regulations on some firms benefits their unregulated competitors.

Original languageEnglish (US)
Pages (from-to)1457-1489
Number of pages33
JournalReview of Financial Studies
Volume30
Issue number5
DOIs
StatePublished - Jan 1 2017
Externally publishedYes

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics

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