EconPapers    
Economics at your fingertips  
 

To Bribe or not to Bribe? Corruption Uncertainty and Corporate Practices

Jan Hanousek (), Anastasiya Shamshur and Jiri Tresl

CERGE-EI Working Papers from The Center for Economic Research and Graduate Education - Economics Institute, Prague

Abstract: 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
Date: 2017-06
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://www.cerge-ei.cz/pdf/wp/Wp597.pdf (application/pdf)

Related works:
Working Paper: To bribe or not to bribe? Corruption uncertainty and corporate practices (2017) Downloads
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: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 ().

 
Page updated 2019-10-22
Handle: RePEc:cer:papers:wp597