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Do anti‐bribery laws reduce the cost of equity? Evidence from the UK Bribery Act 2010

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  • Suhee Kim
  • William Rees
  • Vathunyoo Sila

Abstract

We examine the impact of the UK Bribery Act 2010 on the implied cost of equity. We find a significant reduction in the cost of equity amongst UK firms with high bribery exposure after the passage of the Bribery Act. We further show that the Bribery Act improves internal control systems and increases stock liquidity of firms with high bribery exposure. Our results suggest that more stringent anti‐bribery regulations are not always bad for the firm.

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  • Suhee Kim & William Rees & Vathunyoo Sila, 2020. "Do anti‐bribery laws reduce the cost of equity? Evidence from the UK Bribery Act 2010," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 47(3-4), pages 438-455, March.
    • Handle: RePEc:bla:jbfnac:v:47:y:2020:i:3-4:p:438-455
    DOI: 10.1111/jbfa.12434
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