Policeman for the World: The Rise in Extraterritorial FCPA Enforcement and Foreign Investment Competition

84 Pages Posted: 1 Apr 2019 Last revised: 19 Jun 2020

See all articles by Hans Bonde Christensen

Hans Bonde Christensen

University of Chicago - Booth School of Business

Mark G. Maffett

University of Chicago - Booth School of Business

Thomas Rauter

University of Chicago - Booth School of Business

Date Written: June 18, 2020

Abstract

Using insights gained from Foreign Corrupt Practices Act (FCPA) enforcement actions against corporations from 1977 to 2017, we show that a mid-2000s increase in US extraterritorial FCPA enforcement has a significant deterrent effect on foreign direct investment in high-corruption-risk countries by non-US firms headquartered in developed countries. Regulatory compliance costs appear to play a role in deterring investment. Contrary to prior research on the impact of FCPA enforcement against US firms only, our evidence suggests that extraterritorial enforcement reduces both the FCPA’s anticompetitive impact on US firms and aggregate foreign direct investment in high-corruption-risk countries.

Keywords: Foreign Corruption Regulation; Extraterritorial Enforcement; Foreign Corrupt Practices Act (FCPA); Foreign Direct Investment; Mergers and Acquisitions; Internal Controls

JEL Classification: F50; F60; K2; M4; O1

Suggested Citation

Christensen, Hans Bonde and Maffett, Mark G. and Rauter, Thomas, Policeman for the World: The Rise in Extraterritorial FCPA Enforcement and Foreign Investment Competition (June 18, 2020). Available at SSRN: https://ssrn.com/abstract=3349272 or http://dx.doi.org/10.2139/ssrn.3349272

Hans Bonde Christensen

University of Chicago - Booth School of Business ( email )

5807 South Woodlawn Avenue
Chicago, IL 60637
United States

Mark G. Maffett (Contact Author)

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

Thomas Rauter

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
283
Abstract Views
1,705
rank
117,500
PlumX Metrics