Forbidden Payment: Foreign Bribery and American Business after 1977

41 Pages Posted: 30 Aug 2000 Last revised: 19 Mar 2008

Date Written: September 1995

Abstract

The United States prohibits American individuals and corporations from bribing foreign government officials. Legislation enacted in 1976 and 1977 stipulates tax penalties, fines, and even prison terms for executives of American companies that pay illegal bribes. This paper examines the effect of US anti-bribery legislation on the operations of US firms in bribe-prone countries after 1977. Four separate indicators reveal that US business activities in these countries fell sharply after passage of the Foreign Corrupt Practices Act of 1977. These results suggest that this unilateral action by the United States served to weaken the competitive positions of American firms without significantly reducing the importance of bribery to foreign business transactions.

Suggested Citation

Hines, James Rodger, Forbidden Payment: Foreign Bribery and American Business after 1977 (September 1995). NBER Working Paper No. w5266. Available at SSRN: https://ssrn.com/abstract=225330

James Rodger Hines (Contact Author)

University of Michigan ( email )

625 South State Street
Ann Arbor, MI 48109-1215
United States

NBER

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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