Original title: To bribe or not to bribe? Corruption uncertainty and corporate practices
Authors: Hanousek, Jan ; Shamshur, Anastasiya ; Trešl, Jiří
Document type: Research reports
Year: 2017
Language: eng
Series: CERGE-EI Working Paper Series, volume: 597
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
Project no.: GA16-20451S (CEP)
Funding provider: GA ČR

Institution: Economics Institute AS ČR (web)
Document availability information: Fulltext is available at external website.
External URL: http://www.cerge-ei.cz/pdf/wp/Wp597.pdf
Original record: http://hdl.handle.net/11104/0272900

Permalink: http://www.nusl.cz/ntk/nusl-358340


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