Journal of Business Ethics 151 (3):743-760 (2018)

Vijay Sampath
Pace University
Drawing upon rational choice and investor attention theories, we examine how accusations of corporate bribery and subsequent investigations shape market reactions. Using event study methodology to measure loss in firm value for public firms facing bribery investigations from 1978 to 2010, we found that total market penalties amounted to $60.61 billion. We ran moderated multiple regression analysis to examine further the degree to which the unique characteristics of bribery explain variations in market penalties. Companies committing bribery in less corrupt host countries and with the involvement of compromised executives experienced greater market penalties than did other companies. After partitioning share value losses into components for regulatory penalties, class action settlements, and loss to reputation, we found that reputational penalties account for 81.8¢ of every dollar of share value loss. Omission of reputational penalties in rational choice calculus underestimates bribery costs by 4.5 times. The results suggest that firms should not underestimate the importance of market-imposed reputational penalties by merely considering regulator-imposed fines and sanctions.
Keywords No keywords specified (fix it)
Categories (categorize this paper)
DOI 10.1007/s10551-016-3242-3
Edit this record
Mark as duplicate
Export citation
Find it on Scholar
Request removal from index
Revision history

Download options

PhilArchive copy

Upload a copy of this paper     Check publisher's policy     Papers currently archived: 72,564
External links

Setup an account with your affiliations in order to access resources via your University's proxy server
Configure custom proxy (use this if your affiliation does not provide a proxy)
Through your library

References found in this work BETA

Crime and Punishment.[author unknown] - forthcoming - Latest Results.

View all 15 references / Add more references

Citations of this work BETA

View all 7 citations / Add more citations

Similar books and articles

Bribery and Extortion: Can Restaurants Help?Arthur Zucker - 2000 - Science and Engineering Ethics 6 (2):197-204.


Added to PP index

Total views
20 ( #562,855 of 2,533,482 )

Recent downloads (6 months)
1 ( #391,480 of 2,533,482 )

How can I increase my downloads?


My notes