The Review of Corporate Finance Studies Vol. 5 No. 1 2016
Public Corruption in the United States: Implications for Local Firms
Abstract
We study the relation between state-level public corruption in the United States and firm-value and firms' disclosure policies. Consistent with our hypotheses, firms have significantly lower value (Tobin’s q) and informational transparency in more corrupt areas. Local corruption has a less negative effect on industries that sell primarily to the government, suggesting a quid pro quo between these firms and public officials. Several tests address endogeneity concerns: for example, firms located in different states but close to state borders are affected by differences in state-level corruption, indicating legal jurisdiction matters despite similar local conditions. Received date: March 6, 2015; accepted date: December 7, 2015 by Editor Paolo Fulghieri.
- DOI
- 10.1093/rcfs/cfv016
- Volume
- 5
- Issue
- 1
- Pages
- 102-138
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref