Kicking back against kickbacks: An examination of the Foreign Corrupt Practices Act and US foreign investment

Weishi Jia (), Shuo Li () and Jingran Zhao ()
Additional contact information
Weishi Jia: Monte Ahuja College of Business, Cleveland State University
Shuo Li: Western Washington University
Jingran Zhao: The Hong Kong Polytechnic University

Journal of International Business Studies, 2022, vol. 53, issue 2, No 6, 326-343

Abstract: Abstract This paper studies the effect of the United States (US) Foreign Corrupt Practices Act (FCPA) on US multinational firms’ foreign direct investment (FDI). Unlike prior studies that focused on the passage of the FCPA, our study examines how the actual enforcement of the FCPA affects firms’ foreign investment decisions. We show that initial FCPA enforcement in a host country triggers MNEs to reassess their likelihood of being targeted, which in turn has a strong deterrence effect on subsequent US FDI growth in the host country. This deterrence effect is stronger for host countries with a weaker rule of law and more severe corruption issues. We did not find evidence of significant FDI relocation due to FCPA enforcement. Together, these results provide a comprehensive evaluation of the implications of FCPA enforcement in the global market for FDI.

Keywords: bribery; corruption; foreign direct investment; legal enforcement; institutional theory; difference-in-differences analysis (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1057/s41267-021-00474-7 Abstract (text/html)
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:pal:jintbs:v:53:y:2022:i:2:d:10.1057_s41267-021-00474-7

Ordering information: This journal article can be ordered from
http://www.springer. ... nt/journal/41267/PS2

DOI: 10.1057/s41267-021-00474-7

Access Statistics for this article

Journal of International Business Studies is currently edited by John Cantwell

More articles in Journal of International Business Studies from Palgrave Macmillan, Academy of International Business
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().