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Bribes and Firm ValueStefan ZeumeUniversity of Michigan, Stephen M. Ross School of Business November 1, 2016 Ross School of Business Paper No. 1273 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 anti-bribery regulations on some firms benefits their unregulated competitors.
Number of Pages in PDF File: 42 Keywords: valuation, corruption, regulation, corporate governance JEL Classification: G30, G34, G38, K22 Date posted: November 23, 2012 ; Last revised: November 8, 2016Suggested CitationContact Information
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