The effect of tougher enforcement on foreign firms: Evidence from the Adelphia perp walk

Charles R. Knoeber and Mark D. Walker

Journal of Corporate Finance, 2013, vol. 23, issue C, 382-394

Abstract: The public arrest of Adelphia executives on July 24, 2002 signaled tougher enforcement of laws against corporate crime. On that day and the two following days, foreign firms experienced a cumulative 1.7% decline in value. Relative to domestic firms, the loss was a much larger 4.5%. The expected cost to firms from tougher enforcement suggests three possible reasons. Foreign firms may be targeted more heavily, may face greater penalties, or may find it more costly to react to (deflect) enforcement. We find evidence consistent with foreign firms facing higher costs from tougher enforcement for each of these reasons.

Keywords: Enforcement; Perp walk; Foreign firms (search for similar items in EconPapers)
JEL-codes: G32 G38 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:23:y:2013:i:c:p:382-394

DOI: 10.1016/j.jcorpfin.2013.09.007

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