Causes and consequences of firms' self-reported anticorruption efforts
By: Paul Healy, George Serafeim
Contributors: Serafeim, George; Harvard Business School
Series: Working paper / Harvard Business School -- 12-077; Working paper (Harvard Business School) -- 12-077
Publisher: Harvard Business School
Published: 2013
Place of publication: Boston]
Language: eng
Number of pages: 48
Work titles: Causes and consequences of firm disclosures of anticorruption efforts
Description: We use Transparency International's ratings of self-reported anticorruption efforts for 480 corporations to examine factors underlying firms' efforts and their consequences. We find that firms with high anticorruption efforts are domiciled in countries with low corruption ratings and strong anticorruption enforcement, operate in high corruption risk industries, have recently faced a corruption enforcement action, employ a Big Four audit firm, and have a higher percentage of independent directors. Controlling for these effects, we find that firms with abnormally low anticorruption efforts have relatively higher subsequent media allegations of corruption. They also report higher future sales growth and show a negative relation between profitability change and sales growth in high corruption geographic segments compared to firms with high anticorruption efforts. The net effect on valuation from sales growth and profitability is close to zero. We conclude that, on average, firms' self-reported anticorruption efforts reflect real efforts to combat corruption and are not merely cheap talk.
Notes: "February 2012. (Revised March 2013.)" -- Publisher's website.

Revision of Causes and consequences of firm disclosures of anticorruption efforts.

Includes bibliographical references (pages 41-44).