To Bribe or not to Bribe? Corruption Uncertainty and Corporate Practices
Jan Hanousek (),
Anastasiya Shamshur and
CERGE-EI Working Papers from The Center for Economic Research and Graduate Education - Economics Institute, Prague
Using a large sample of private firms over the period from 2001 to 2013, we study the effect of corruption uncertainty on corporate investments and cash holdings. We find that a higher uncertainty about the level of corruption is associated with lower corporate investments and lower cash holdings. These results are sensitive to the ownership structure of a firm. Firms with no foreign majority ownership appear to be more sensitive to corruption-induced uncertainty than majority-controlled foreign firms. They significantly decrease their investments and cash holdings. We hypothesize that they move their cash off-balance-sheet to create cash reserves as the uncertainty of when, whom, and how much to bribe increases.
Keywords: corporate investment; corruption; uncertainty; cash holdings; firms; panel data; Europe (search for similar items in EconPapers)
JEL-codes: C33 D24 G32 L60 L80 M21 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec and nep-pol
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
Working Paper: To bribe or not to bribe? Corruption uncertainty and corporate practices (2017)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:cer:papers:wp597
Access Statistics for this paper
More papers in CERGE-EI Working Papers from The Center for Economic Research and Graduate Education - Economics Institute, Prague Contact information at EDIRC.
Bibliographic data for series maintained by Jana Koudelkova ().