The Impact of Anti-Corruption Laws: Evidence from the U.K. Bribery Act’s Extraterritorial Reach * Amanda Sanseverino † ABSTRACT I study the impact of foreign anti-corruption laws using a setting that exploits US multinational firms’ differential exposure to the extraterritorial jurisdiction of the 2010 United Kingdom Bribery Act (UKBA). Results suggest that adoption of the UKBA, which raised public litigation costs associated with foreign bribery, induces US firms subject to its jurisdiction to curb their business exposure to countries with high corruption risk, relative to their unexposed US peers. The effect is more pro- nounced for firms with greater enforcement risk and bribery exposure, and is robust to a battery of placebo and additional analyses. This study is the first to provide empirical evidence of the impact of foreign anti-corruption laws on US firms, which are already subject to the US Foreign Corrupt Prac- tices Act. This evidence supports extraterritoriality as a critical element of effective anti-corruption laws and highlights its important role in regulating multinational firms in the globalized economy. Keywords: Anti-Corruption Laws; Bribery; Corruption; Extraterritoriality; Multinational Firms; Regulatory Globalization JEL Classification: F23; F60; K20; K40; L51 Data Availability: Data are available from the public sources cited in the text. * This paper is based on my dissertation from Baruch College–City University of New York (CUNY). I am grate- ful for invaluable guidance from my dissertation committee: Donal Byard (co-chair), Ted Joyce, Heemin Lee, Edward Li (co-chair), and Carol Marquardt. I am also thankful for helpful suggestions and feedback from David Veenman (the editor), two anonymous reviewers, Jane Barton, Hans Christensen, Robert Colson, Alvaro Cuervo-Cazurra, Masako Dar- rough, Hammou Elbarmi, David Godsell, Kalin Kolev, Brandon Lock, Mark Maffett, Albert Mensah (discussant), Monica Neamtiu, Roger Silvers, Kevin Sun (discussant), Stefan Zeume, and Clare Wang, as well as from Miguel Acosta, Elsa All- man, Heyun Li, Ying Liang, Xintian Lin, Saghar Samimy, and Xin Yuan. I appreciate valuable institutional insights from Elias Brockman (EY Forensic & Integrity Services; formerly DOJ), Camilla de Silva (U.K. Serious Fraud Office), Lo- rynn Demetriades (Control Risks U.K.), Palmina M. Fava (Vinson & Elkins LLP), Joseph Koletar (formerly U.S. FBI), Carlos F. Ortiz (McDermott Will & Emery LLP), Faheem Rathore (formerly U.S. DOJ), Virginia Chavez Romano (White & Case LLP), and Alexandra Wrage (TRACE International). I thank Scott Dyreng and Robert Hills for sharing Exhibit 21 data. I also thank participants at the 2020 AAA Midyear Meeting of the Financial Accounting and Reporting Section and the Joint Midyear Meeting of the Accounting Information Systems, Strategic and Emerging Technologies, and Inter- national Accounting Sections, along with workshop participants at Baruch College and Manhattan College. I gratefully acknowledge funding from Baruch College and the Graduate Center of the City University of New York during the doctoral program. This paper was the 2021 winner of the Outstanding International Accounting Dissertation Award presented by the International Accounting Section of the American Accounting Association (AAA). † Manhattan College, The O’Malley School of Business, 4513 Manhattan College Pkwy, Riverdale, NY 10471. Email: [email protected]. Electronic copy available at: https://ssrn.com/abstract=3913208
The Impact of Anti-Corruption Laws: Evidence from the U.K. Bribery Act’s Extraterritorial Reach
Jul 06, 2023
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