The Deterrent Effect of Anti-Bribery Law Enforcement on the Quality of Earnings

92 Pages Posted: 11 Jul 2018 Last revised: 27 Jul 2022

See all articles by Olivier Greusard

Olivier Greusard

University of Quebec at Montreal (UQAM) - Université du Québec à Montréal

Pramuan Bunkanwanicha

ESCP Business School

Date Written: July 26, 2022

Abstract

This paper studies the effect of anti-bribery enforcement on the accrual quality of investigated firms and their peers. We analyze a hand-collected sample of 241 bribery cases investigated under the US Foreign Corruption Practices Act (FCPA) over the period 1978-2015. Exploiting the disclosure of anti-bribery law enforcement actions, we document a positive effect on the accrual quality of investigated firms’ peers, but not the investigated firms themselves. Additional tests document that this positive effect is significant only for cases revealed before 2005, when the prosecutors developed their enforcement activity and the use of alternative resolution vehicles. Our results show a positive impact of anti-bribery law enforcement that incentivizes peer firms to enhance their accrual quality once they acknowledge bribing behavior in their industry.

Keywords: Corruption, Anti-bribery Laws, Accounting Quality, Deterrent Effect

JEL Classification: F23, G30, G38, K42, M41, M48

Suggested Citation

Greusard, Olivier and Bunkanwanicha, Pramuan, The Deterrent Effect of Anti-Bribery Law Enforcement on the Quality of Earnings (July 26, 2022). Available at SSRN: https://ssrn.com/abstract=3192821 or http://dx.doi.org/10.2139/ssrn.3192821

Olivier Greusard (Contact Author)

University of Quebec at Montreal (UQAM) - Université du Québec à Montréal ( email )

CP 8888 Succ Centre Ville
Montréal, Québec H3C3P8
Canada

Pramuan Bunkanwanicha

ESCP Business School ( email )

79 Avenue de la Republique
Paris, 75011
France

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