Corruption and International Valuation: Does Virtue Pay?

Charles Lee and David Ng ()

No 127288, Working Papers from Cornell University, Department of Applied Economics and Management

Abstract: Using firm-level data from 46 countries, we investigate the relation between corruption – the misuse of public office for private gains – and international corporate values. Our analysis shows that firms from more (less) corrupt countries trade at significantly lower (higher) market multiples. This result is robust to the inclusion of many control variables suggested by valuation theory. On average, an increase in the corruption level from that of Singapore to that of Mexico corresponds to a decrease of 18.1 in the PE ratio, and a decrease of 1.17 in the PB ratio. We conclude that corruption has significant economic consequences for shareholder value.

Keywords: Risk; and; Uncertainty (search for similar items in EconPapers)
Pages: 49
Date: 2002-06
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://ageconsearch.umn.edu/record/127288/files/Cornell_Dyson_wp0214.pdf (application/pdf)

Related works:
Working Paper: Corruption and International Valuation: Does Virtue Pay? (2006)
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:ags:cudawp:127288

DOI: 10.22004/ag.econ.127288

Access Statistics for this paper

More papers in Working Papers from Cornell University, Department of Applied Economics and Management Contact information at EDIRC.
Bibliographic data for series maintained by AgEcon Search ().