The Deterrent Effect of Anti-Bribery Law Enforcement on the Quality of Earnings
LabEx ReFi Working Paper Series No. 2017-20
47 Pages Posted: 21 Jun 2018
Date Written: June 22, 2018
This paper investigates the quality of accounting information of bribe-paying firms and their competitors. We analyze a hand-collected sample of 241 enforced bribery cases under the US Foreign Corruption Practices Act (FCPA) during 1978-2015. Exploiting the disclosure of anti-bribery law enforcements, we document a positive effect on the quality of accounting information of bribe-paying firms’ competitors, but not the bribe-paying firms. Additional tests document that this positive effect remains significant for cases revealed in the last decade (in or after 2005) when enforcement became a priority of the prosecutors. Our results suggest a positive impact of anti-bribery law enforcement that incentivizes other firms to enhance their accounting information once they acknowledge a bribing behavior of a peer.
Keywords: Corruption, Anti-bribery Laws, Accounting Quality, Deterrent Effect
JEL Classification: F23, G30, G38, K42, M41, M48
Suggested Citation: Suggested Citation