Bribery and Cross-border Acquisitions

50 Pages Posted: 19 Jan 2016 Last revised: 25 Jan 2017

Guosong Xu

WHU - Otto Beisheim School of Management

Date Written: November 1, 2016


This paper explores (1) how foreign bribery affects an acquirer’s engagement in cross-border takeovers, and (2) how the use of bribes determines acquisition synergy. I explore an exogenous implementation of the OECD Anti-bribery Convention in 41 countries that criminalizes bribe-paying by acquirers in foreign markets. I document that cross-border deal frequency drops significantly from affected countries after the law enactment, and that more corrupt target countries experience a greater deal number decline. These results suggest a hidden use of bribes in cross-border transactions. Further evidence suggests that deal synergy drops due to the prohibition against foreign bribery: deal premium decreases significantly following the laws, and deal abnormal returns drop as the corruption and governance environment in the target country worsens relative to the acquirer country.

Keywords: Cross-border mergers and acquisitions (M&A), Corruption, Anti-bribery legislation, Deal synergy

JEL Classification: G34, G38, K22

Suggested Citation

Xu, Guosong, Bribery and Cross-border Acquisitions (November 1, 2016). Available at SSRN: or

Guosong Xu (Contact Author)

WHU - Otto Beisheim School of Management ( email )


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