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

Abstract

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

Bunkanwanicha, Pramuan and Greusard, Olivier, The Deterrent Effect of Anti-Bribery Law Enforcement on the Quality of Earnings (June 22, 2018). LabEx ReFi Working Paper Series No. 2017-20. Available at SSRN: https://ssrn.com/abstract=3198221 or http://dx.doi.org/10.2139/ssrn.3198221

Pramuan Bunkanwanicha

ESCP Europe ( email )

79 Avenue de la Republique
Paris, 75011
France

Olivier Greusard (Contact Author)

ESCP Europe ( email )

79, avenue de la République
Paris, 75011
France

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