Who Benefits from Anti-Corruption Enforcement?
46 Pages Posted: 29 Jan 2021 Last revised: 16 Apr 2021
Date Written: December 9, 2020
We exploit enforcement actions for violations of the U.S. Foreign Corrupt Practices Act in non-OECD countries to study the effect of anti-bribery enforcement on unpunished firms. Firms in the same country-industry as the violator experience significant increases in revenue (+6.4%) and asset productivity (+4.2%). This result is driven by foreign-owned business group affiliates and amplified when affiliates are active in government-dependent industries, members of groups with limited corruption experience, and owned by productive parents. Overall, anti-bribery enforcement actions, which also reduce local corruption levels, result in reallocation of economic activity and level a playing field disrupted by corruption.
Keywords: business groups, competition, corruption, firm growth, Foreign Corrupt Practices Act
JEL Classification: G30, G38, K22
Suggested Citation: Suggested Citation