Download This PaperDo Anti-Bribery Laws Reduce the Cost of Equity? Evidence From the UK Bribery Act 2010
Journal of Business Finance and Accounting, Vol. 47, Issue 3-4, pp. 438-455, 2020
33 Pages Posted: 30 Jul 2018 Last revised: 14 Jul 2020
Date Written: May 1, 2020
Abstract
We examine the impact of the U.K. Bribery Act 2010 on the implied cost of equity. We find a significant reduction in the cost of equity amongst U.K. firms with high bribery exposure. We further show that the Bribery Act improves internal control system and increases stock liquidity of firms with high bribery exposure. Our results suggest that more stringent anti-bribery regulations are not always bad for the firm.
Keywords: bribery, anti-bribery law, cost of equity, residual income valuation, internal control, stock liquidity, information asymmetry
JEL Classification: G30, G38, K22
Suggested Citation: Suggested Citation