REPUTATIONAL PENALTIES TO FIRMS IN ANTITRUST INVESTIGATIONS

Stijn van den Broek, Ron Kemp, Willem Verschoor and Anne-Claire de Vries

Journal of Competition Law and Economics, 2012, vol. 8, issue 2, 231-258

Abstract: We estimate the impact of legal penalties imposed on Dutch listed firms targeted by competition authorities from 1998 to 2008 on a firm's stock market value. On average, firms lose 2.3 percent of their market values when an antitrust investigation is uncovered. This corresponds to a total value loss of €4.3 billion. Overall, the fines imposed by the legal system contribute to only 12 percent of this total value loss. Another 55 percent of the total value loss is explained by the lost conspiracy-generated profits. We find that the residual 33 percent of the total value loss is explained by reputation loss. Thus, cartel offenders are disciplined largely through market-induced reputational penalties, not through legal penalties.

JEL-codes: G1 K2 (search for similar items in EconPapers)
Date: 2012
References: Add references at CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
http://hdl.handle.net/10.1093/joclec/nhs008 (application/pdf)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oup:jcomle:v:8:y:2012:i:2:p:231-258.

Access Statistics for this article

Journal of Competition Law and Economics is currently edited by Nicholas Economides, Amelia Fletcher, Michal Gal, Damien Geradin, Ioannis Lianos and Tommaso Valletti

More articles in Journal of Competition Law and Economics from Oxford University Press
Bibliographic data for series maintained by Oxford University Press ().