Bribes and Firm Value

42 Pages Posted: 23 Nov 2012 Last revised: 8 Nov 2016

See all articles by Stefan Zeume

Stefan Zeume

University of Illinois at Urbana-Champaign

Date Written: November 1, 2016


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.

Keywords: valuation, corruption, regulation, corporate governance

JEL Classification: G30, G34, G38, K22

Suggested Citation

Zeume, Stefan, Bribes and Firm Value (November 1, 2016). Ross School of Business Paper No. 1273, Available at SSRN: or

Stefan Zeume (Contact Author)

University of Illinois at Urbana-Champaign ( email )

1206 South Sixth Street
Champaign, IL 61820
United States

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