How Much do Firms Pay as Bribes and What Benefits do They Get? Evidence from Corruption Cases Worldwide
Stephen Yan-Leung Cheung
City University of Hong Kong (CityUHK) - Department of Economics & Finance
P. Raghavendra Rau
University of Cambridge; UC Berkeley - Haas School of Business
Hong Kong Baptist University (HKBU) - Department of Finance and Decision Sciences
March 30, 2012
24th Australasian Finance and Banking Conference 2011 Paper
We analyze a hand-collected sample of 166 prominent bribery cases, involving 107 publicly listed firms from 20 stock markets that have been reported to have bribed government officials in 52 countries worldwide during 1971-2007. We focus on the initial date of award of the contract for which the bribe was paid (rather than of the revelation of the bribery). Our data enable us to describe in detail the mechanisms through which bribes affect firm value. We find that firm performance, the rank of the politicians bribed, as well as bribe-paying and bribe-taking country characteristics affect the magnitude of the bribes and the benefits that firms derive from them.
Number of Pages in PDF File: 39
Keywords: Corruption, bribes, firm performance, country characteristics
JEL Classification: G14, G34, F23, K42, M14working papers series
Date posted: February 28, 2011 ; Last revised: September 14, 2012
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