What determines the return to bribery? Evidence from corruption cases worldwide
Institute for Operations Research and the Management Sciences
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Cheung, Y., Rau, P., & Stouraitis, A. (2020). What determines the return to bribery? Evidence from corruption cases worldwide. Management Science https://doi.org/10.1287/mnsc.2020.3763
We analyze a hand-collected sample of bribery cases from around the world to describe how the payment of bribes affects shareholder value. The net present value of a bribe conditional on getting caught is close to zero for the median firm in our sample. However, controlling for industry, country, and firm characteristics, a $1 increase in the size of the bribe is associated with an ex ante $6-9 increase in the value of the firm, suggesting a correlation between the size of bribes and the size of available benefits. Proxies for information disclosure appear significant in explaining these benefits, with more disclosure associated with lower benefits. However, this result is driven by democratic countries where bribepaying firms receive smaller benefits relative to the bribes they pay. Information disclosure is not significant in autocratic countries.
The study has benefited from financial assistance from the Hong Kong government’s General Research Fund (GRF), project HKBU 247511.
External DOI: https://doi.org/10.1287/mnsc.2020.3763
This record's URL: https://www.repository.cam.ac.uk/handle/1810/307514
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