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Bribes and Firm Value

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  • Stefan Zeume

Abstract

I exploit the passage of the U.K. Bribery Act 2010 as a shock to U.K. firms’ cost of doing business. Around the Act’s passage, U.K. firms operating in high-corruption countries experience a drop in firm value, while their non-U.K. competitors in these countries encounter an increase. U.K. firms respond to the Act by reducing the expansion of their subsidiary network into perceptively corrupt countries. Moreover, their sales and merger and acquisition (M&A) activity in such countries declines. In sum, bribes facilitate doing business in certain countries. Imposing unilateral antibribery regulations on some firms benefits their unregulated competitors.

Suggested Citation

  • Stefan Zeume, 2017. "Bribes and Firm Value," The Review of Financial Studies, Society for Financial Studies, vol. 30(5), pages 1457-1489.
    • Handle: RePEc:oup:rfinst:v:30:y:2017:i:5:p:1457-1489.
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    File URL: http://hdl.handle.net/10.1093/rfs/hhw108
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    More about this item

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law

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