Sanctions, reputational losses and salience

Daniel M. Berkowitz, Guillermo Lezama and Claire Nackle

No 1/2026, BOFIT Discussion Papers from Bank of Finland Institute for Emerging Economies (BOFIT)

Abstract: Can government agencies in sanctioning countries deter their companies from violating laws that limit business transactions with sanctioned countries? To understand this issue, we study the Office of Foreign Assets Control (OFAC), which is the primary enforcer of sanctions in the United States. OFAC announces a company's violations and penalty only after it has successfully completed its investigation. We document that OFAC's announcements were unanticipated and imposed reputational losses that could deter non-compliance throughout the industry when the penalties were large enough and when announcements were made at times when OFAC was being searched intensely on the internet. This suggests that a broader market sentiment sympathetic to OFAC's mission of stopping financial crimes was necessary.

Keywords: Sanctions; reputational losses; salience; announcement; compliance; deterrence (search for similar items in EconPapers)
JEL-codes: G18 K42 (search for similar items in EconPapers)
Date: 2026
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.econstor.eu/bitstream/10419/336767/1/1950963500.pdf (application/pdf)

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:zbw:bofitp:336767

Access Statistics for this paper

More papers in BOFIT Discussion Papers from Bank of Finland Institute for Emerging Economies (BOFIT) Contact information at EDIRC.
Bibliographic data for series maintained by ZBW - Leibniz Information Centre for Economics ().