nach oben

Journal of Business Ethics

Erschienen in:

11.07.2016

Corporate Reputation’s Invisible Hand: Bribery, Rational Choice, and Market Penalties

verfasst von: Vijay S. Sampath, Naomi A. Gardberg, Noushi Rahman

Erschienen in: Journal of Business Ethics | Ausgabe 3/2018

Einloggen

Aktivieren Sie unsere intelligente Suche, um passende Fachinhalte oder Patente zu finden.

search-config

KI-gestützte Suche

Aus

Abstract

Drawing upon rational choice and investor attention theories, we examine how accusations of corporate bribery and subsequent investigations shape market reactions. Using event study methodology to measure loss in firm value for public firms facing bribery investigations from 1978 to 2010, we found that total market penalties amounted to $60.61 billion. We ran moderated multiple regression analysis to examine further the degree to which the unique characteristics of bribery explain variations in market penalties. Companies committing bribery in less corrupt host countries and with the involvement of compromised executives experienced greater market penalties than did other companies. After partitioning share value losses into components for regulatory penalties, class action settlements, and loss to reputation, we found that reputational penalties account for 81.8¢ of every dollar of share value loss. Omission of reputational penalties in rational choice calculus underestimates bribery costs by 4.5 times. The results suggest that firms should not underestimate the importance of market-imposed reputational penalties by merely considering regulator-imposed fines and sanctions.

Vorheriger Artikel Leader Narcissism Predicts Malicious Envy and Supervisor-Targeted Counterproductive Work Behavior: Evidence from Field and Experimental Research

Nächster Artikel The Integrity of Financial Analysts: Evidence from Asymmetric Responses to Earnings Surprises

Sie haben noch keine Lizenz? Dann Informieren Sie sich jetzt über unsere Produkte:

Springer Professional "Wirtschaft+Technik"

Online-Abonnement

Mit Springer Professional "Wirtschaft+Technik" erhalten Sie Zugriff auf:

über 102.000 Bücher
über 537 Zeitschriften

aus folgenden Fachgebieten:

Automobil + Motoren
Bauwesen + Immobilien
Business IT + Informatik
Elektrotechnik + Elektronik
Energie + Nachhaltigkeit
Finance + Banking
Management + Führung
Marketing + Vertrieb
Maschinenbau + Werkstoffe
Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

Jetzt informieren

Springer Professional "Wirtschaft"

Online-Abonnement

Mit Springer Professional "Wirtschaft" erhalten Sie Zugriff auf:

über 67.000 Bücher
über 340 Zeitschriften

aus folgenden Fachgebieten:

Bauwesen + Immobilien
Business IT + Informatik
Finance + Banking
Management + Führung
Marketing + Vertrieb
Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

Jetzt informieren

Aguinis, H. (2004). Regression analysis for categorical moderators. New York: Guilford Press.

Aiken, L. S., & West, S. G. (1991). Multiple regression: Testing and interpreting interactions. Newbury Park, CA: Sage.

Alexander, C. (1999). On the nature of the reputational penalty for corporate crime: Evidence. Journal of Law and Economics, 42(1), 489–526.CrossRef

Andersson, U., Cuervo-Cazurra, A., & Nielsen, B. B. (2014). Explaining interaction effects within and across levels of analysis. Journal of International Business Studies, 45(9), 1063–1071.CrossRef

Andrei, D., & Hasler, M. (2014). Investor attention and stock market volatility. Review of Financial Studies,. doi:10.1093/rfs/hhu059.

Arthaud-Day, M. L., Certo, S. T., Dalton, C. M., & Dalton, D. R. (2006). A changing of the guard: Executive and director turnover following corporate financial restatements. Academy of Management Journal, 49(6), 1119–1136.CrossRef

Baker, W., & Faulkner, R. (1993). The social organization of conspiracy. American Sociological Review, 58(6), 837–860.CrossRef

Baughn, C., Bodie, N. L., Buchanan, M. A., & Bixby, M. B. (2010). Bribery in international business transactions. Journal of Business Ethics, 92(1), 15–32.CrossRef

Beasley, M. S., Carcello, J. V., Hermanson, D. R., & Neal, T. L. (2010). Fraudulent financial reporting, 1998–2007: An analysis of U.S. public companies. New York: COSO.

Beatty, R., Bunsis, H., & Hand, J. (1998). The indirect economic penalties in SEC investigations of underwriters. Journal of Financial Economics, 50(2), 151–186.CrossRef

Becker, G. (1968). Crime and punishment: An economic approach. Journal of Political Economy, 76(2), 169–217.CrossRef

Beets, S. D. (2005). Understanding the demand-side issues of international corruption. Journal of Business Ethics, 57(1), 65–81.CrossRef

Bromiley, P., & Marcus, A. (1989). The deterrent to dubious corporate behavior: Profitability, probability and safety recalls. Strategic Management Journal, 10(2), 233–250.

Brouthers, L. E., Gao, Y., & McNicol, J. P. (2008). Corruption and market attractiveness influences on different types of FDI. Strategic Management Journal, 29(6), 673–680.CrossRef

Brown, S. J., & Warner, J. B. (1985). Using daily stock returns: The case of event studies. Journal of Financial Economics, 14(1), 3–31.CrossRef

Chen, C. J., Ding, Y., & Kim, C. (2010). High-level politically connected firms, corruption, and analyst forecast accuracy around the world. Journal of International Business Studies, 41(9), 1505–1524.CrossRef

Chen, Y., Yasar, M., & Rejesus, R. M. (2008). Factors influencing the incidence of bribery payouts by firms: A cross-country analysis. Journal of Business Ethics, 77(2), 231–244.CrossRef

Cowan, A. R. (1992). Nonparametric event study tests. Review of Quantitative Finance and Accounting, 2(4), 343–358.CrossRef

Cullen, J. B., Parboteeah, K., & Hoegl, M. (2004). Cross-national differences in managers’ willingness to justify ethically suspect behaviors: A test of institutional anomie theory. Academy of Management Journal, 47(3), 411–421.

Darrough, M. N. (2010). The FCPA and the OECD Convention: Some lessons from the U.S. experience. Journal of Business Ethics, 93(2), 255–276.CrossRef

Davis, J. H., & Ruhe, J. A. (2003). Perceptions of country corruption antecedents and outcomes. Journal of Business Ethics, 43(4), 275–288.CrossRef

Doh, J., Rodriquez, P., Uhlenbruck, K., Collins, J., & Eden, L. (2003). Coping with corruption in foreign markets. Academy of Management Executive, 17(3), 114–127.

Dowling, G., & Moran, P. (2012). Corporate reputations. California Management Review, 54(2), 25–42.CrossRef

Drabek, Z., & Payne, W. (2001). The impact of transparency on foreign direct investment. Working paper ERAD-99-02. Geneva: World Trade Organization.

Eccles, R., Newquist, S., & Schatz, R. (2007). Reputation and its risks. Harvard Business Review, 85(2), 104–114.

Fich, E. M., & Shivdasani, A. (2007). Financial fraud, director reputation, and shareholder wealth. Journal of Financial Economics, 86(2), 306–336.CrossRef

Fitch Ratings. (2010). U.S. Foreign Corrupt Practices Act—No minor matter. Retrieved June 17, 2012, from http://www.reuters.com/article/idUSTRE6504MX20100601.

Fombrun, C., Gardberg, N., & Barnett, M. (2000). Opportunity platforms and safety nets: Corporate citizenship and reputational risk. Business and Society Review, 105(1), 85–106.CrossRef

Fombrun, C., & van Riel, C. (2004). Fame and fortune. Upper Saddle River, NJ: FT-Prentice Hall.

Galang, R. M. N. (2012). Victim or victimizer: Firm responses to government corruption. Journal of Management Studies, 49(2), 429–462.CrossRef

Gardberg, N. A., Sampath, V., & Rahman, N. (2012). Corruption and corporate reputation: The paradox of buffering and suffering. In Proceedings of the seventy-second annual meeting of the Academy of Management. doi:10.5465/AMBPP.2012.206. ISSN 1543-8643.

Gordon, K., & Miyahe, M. (2001). Business approaches to combating bribery: A study of codes of conduct. Journal of Business Ethics, 34(3), 161–173.CrossRef

Hair, J. F., Anderson, R. E., Tatham, R. L., & Black, W. C. (1998). Multivariate data analysis with readings. Englewood Cliffs, NJ: Prentice Hall.

Healy, P. M., & Serafeim, G. (2016). An analysis of firms’ self-reported anticorruption efforts. The Accounting Review, 91(2), 489–511.CrossRef

Hess, D. (2009). Catalyzing corporate commitment to combating corruption. Journal of Business Ethics, 88(4), 781–790.CrossRef

Hirshleifer, D., Lim, S. S., & Teoh, S. H. (2009). Driven to distraction: Extraneous events and underreaction to earnings news. Journal of Finance, 64(5), 2289–2325.CrossRef

Hirshleifer, D., & Teoh, S. H. (2003). Limited attention, information disclosure, and financial reporting. Journal of Accounting and Economics, 36(1–3), 337–386.CrossRef

Husted, B. W. (1999). Wealth, culture and corruption. Journal of International Business Studies, 30(2), 339–360.CrossRef

Jackson, T. (2000). Management ethics and corporate policy: A cross-cultural comparison. Journal of Management Studies, 37(3), 349–369.CrossRef

Janney, J. J., & Gove, S. (2011). Reputation and corporate social responsibility aberrations, trends, and hypocrisy: Reactions to firm choices in the stock option backdating scandal. Journal of Management Studies, 48(7), 1562–1585.CrossRef

Jarrell, G., & Peltzman, S. (1985). The impact of product recalls on the wealth of sellers. Journal of Political Economy, 93(2), 512–536.CrossRef

Jensen, N. M., Li, Q., & Rahman, A. (2010). Understanding corruption and firm responses in cross-national firm-level surveys. Journal of International Business Studies, 41(9), 1481–1504.CrossRef

Kang, E. (2008). Director interlocks and spillover effects of reputational penalties from financial reporting fraud. Academy of Management Journal, 51(3), 537–555.CrossRef

Karpoff, J. M. (2012). Does reputation work to discipline corporate misconduct? In M. L. Barnett & T. G. Pollock (Eds.), The Oxford handbook of corporate reputation (pp. 361–382). London: Oxford University Press.

Karpoff, J. M., Lee, D., & Martin, G. (2008a). The consequences to managers for financial misrepresentation. Journal of Financial Economics, 88(2), 193–215.CrossRef

Karpoff, J. M., Lee, D., & Martin, G. (2008b). The cost to firms of cooking the books. Journal of Financial and Quantitative Analysis, 43(3), 581–612.CrossRef

Karpoff, J. M., Lee, D., & Martin, G. (2015). The value of bribery to bribe paying firms. Working paper. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1573222.

Karpoff, J. M., & Lott, J., Jr. (1993). The reputational penalty firms bear from committing criminal fraud. Journal of Law and Economics, 36(2), 757–802.CrossRef

Karpoff, J. M., Lott, J., & Wehrly, E. (2005). The reputational penalties for environmental violations: Empirical evidence. Journal of Law and Economics, 48(2), 653–675.CrossRef

Knight, R. F., & Pretty, D. J. (1999). Corporate catastrophes, stock returns and trading volume. Corporate Reputation Review, 2(4), 363–378.CrossRef

Kostova, T., & Zaheer, S. (1999). Organizational legitimacy under conditions of complexity: The case of the multinational enterprise. Academy of Management Review, 24(1), 64–81.CrossRef

Lee, S.-H., Oh, K., & Eden, L. (2010). Why do firms bribe? Insights from control theory into firms’ exposure and vulnerability to corruption. Management International Review, 50(6), 775–796.CrossRef

MacKinlay, A. C. (1997). Event studies in economics and finance. Journal of Economic Literature, 35(1), 13–39.

Martin, K., Cullen, K., Johnson, J., & Parboteeah, K. (2007). Deciding to bribe: A cross-level analysis of firm and home country influences on bribery activity. Academy of Management Journal, 50(6), 1401–1422.CrossRef

McWilliams, A., & Siegel, D. (1997). Event studies in management research: Theoretical and empirical issues. Academy of Management Journal, 40(3), 626–657.

Mishina, Y., Block, E. S., & Mannor, M. J. (2012). The path dependence of organizational reputation: How social judgment influences assessments of capability and character. Strategic Management Journal, 33(5), 459–477.CrossRef

Mishina, Y., Dykes, B. J., Block, E. S., & Pollock, T. G. (2010). Why “good” firms do bad things: The effects of high aspirations, high expectations, and prominence on the incidence of corporate illegality. Academy of Management Journal, 53(4), 701–722.CrossRef

Mudambi, R., Navarra, P., & Delios, A. (2013). Government regulation, corruption and FDI. Asia–Pacific Journal of Management, 30(2), 487–511.

Murphy, D., Shrieves, R., & Tibbs, S. (2009). Understanding the penalties associated with corporate misconduct: An empirical examination of earnings and risk. Journal of Financial and Quantitative Analysis, 44(1), 55–83.CrossRef

OECD anti-bribery convention: Progress report 2009. Enforcement of the OECD Convention on combating bribery of foreign public officials in international business transactions. Retrieved June 17, 2012, from http://www.transparency.org/news_room/in_focus/2009/oecd_pr_2009.

Pacini, C., Swingen, J. A., & Rogers, H. (2002). The role of the OECD and EU convention in combating bribery of foreign public officials. Journal of Business Ethics, 37(4), 385–405.CrossRef

Paetzold, R. L., Dipboye, R. L., & Elsback, K. D. (2008). A new look at stigmatization in and of organizations. Academy of Management Review, 33(1), 186–193.CrossRef

Palmrose, Z., Richardson, V., & Scholz, S. (2004). Determinants of market reactions to earnings restatements. Journal of Accounting and Economics, 37(1), 59–89.CrossRef

Paruchuri, S., & Misangyi, V. F. (2015). Investor perceptions of financial misconduct: The heterogeneous contamination of bystander firms. Academy of Management Journal, 58(1), 169–194.CrossRef

Paternoster, R., & Simpson, S. (1996). Sanction threats and appeals to morality: Testing a rational choice model of corporate crime. Law and Society Review, 30(3), 549–583.CrossRef

Peltzman, S. (1981). The effects of FTC advertising regulation. Journal of Law and Economics, 24(3), 403–448.CrossRef

Peng, L., & Xiong, W. (2006). Investor attention, overconfidence and category learning. Journal of Financial Economics, 80(3), 563–602.CrossRef

Pfarrer, M. D., Decelles, K. A., Smith, K. G., & Taylor, M. S. (2008). After the fall: Reintegrating the corrupt organization. Academy of Management Review, 33(3), 730–748.CrossRef

Pfarrer, M. D., Pollock, T. G., & Rindova, V. P. (2010). A tale of two assets: The effects of firm reputation and celebrity on earnings surprises and investors’ reactions. Academy of Management Journal, 53(5), 1131–1152.CrossRef

Pinto, J., Leana, C. R., & Pil, F. K. (2008). Corrupt organizations or organizations of corrupt individuals? Two types of organization-level corruption. Academy of Management Review, 33(3), 685–709.CrossRef

Rahman, N., & Sampath, V. (2016). Corruption. In C. Carroll (Ed.), The SAGE encyclopedia of corporate reputation (pp. 229–234). New York: Sage.

Roberts, P. W., & Dowling, G. R. (2002). Corporate reputation and sustained superior financial performance. Strategic Management Journal, 23(12), 1077–1093.CrossRef

Robertson, C. J., & Watson, A. (2004). Corruption and change: The impact of foreign direct investment. Strategic Management Journal, 25(4), 385–396.CrossRef

Sanyal, R. (2005). Determinants of bribery in international business: The cultural and economic factors. Journal of Business Ethics, 59(1/2), 139–145.CrossRef

Scott, W. R. (2014). Institutions and organizations: Ideas, interests, and identities (4th ed.). Thousand Oaks, CA: Sage Publication.

Shamsie, J. (2003). The context of dominance: An industry-driven framework for exploiting reputation. Strategic Management Journal, 24(3), 199–215.CrossRef

Shearman and Sterling LLP. (2010). FCPA Digest: Cases and review releases relating to bribes to foreign officials under the Foreign Corrupt Practices Act of 1977. Retrieved January 15, 2011, from http://www.shearman.com/files/upload/FCPA-Digest-Spring-2010.pdf.

Shover, N., & Hochstetler, A. (2006). Choosing white-collar crime. New York: Cambridge University Press.

Sims, R. (2009). Towards a better understanding of organizational efforts to rebuild reputation following an ethical scandal. Journal of Business Ethics, 90(4), 453–472.CrossRef

Spencer, J., & Gomez, C. (2011). MNEs and corruption: The impact of national institutions and subsidiary strategy. Strategic Management Journal, 32(3), 280–300.CrossRef

Stevens, B. (2013). How ethical are U.S. business executives? A study of perceptions. Journal of Business Ethics, 117(2), 361–369.CrossRef

Stout, L. (2003). The mechanisms of market inefficiency: An introduction to the new finance. Journal of Corporation Law, 28(4), 635–669.

Trace International. (2011). Trace compendium. Retrieved January 15, 2011, from https://secure.traceinternational.org/compendium.

Transparency International. (2015). Exporting corruption: Assessing enforcement of the OECD Convention on Combating Foreign Bribery. Retrieved March 12, 2016, from http://www.transparency.org/exporting_corruption/.

Weismann, M. (2009). The Foreign Corrupt Practices Act: The failure of the self-regulatory model of corporate governance in the global business environment. Journal of Business Ethics, 88(4), 615–661.CrossRef

Zhang, X., Bartol, K. M., Pfarrer, M. D., & Khanin, D. M. (2008). CEOs on the edge: Earnings manipulation and stock-based incentive misalignment. Academy of Management Journal, 51(2), 241–258.CrossRef

Titel: Corporate Reputation’s Invisible Hand: Bribery, Rational Choice, and Market Penalties
verfasst von: Vijay S. Sampath
Naomi A. Gardberg
Noushi Rahman
Publikationsdatum: 11.07.2016
Verlag: Springer Netherlands
Erschienen in: Journal of Business Ethics / Ausgabe 3/2018
Print ISSN: 0167-4544
Elektronische ISSN: 1573-0697
DOI: https://doi.org/10.1007/s10551-016-3242-3

Springer Professional

Abstract

Bitte loggen Sie sich ein, um Zugang zu Ihrer Lizenz zu erhalten.

Sie haben noch keine Lizenz? Dann Informieren Sie sich jetzt über unsere Produkte:

Springer Professional "Wirtschaft+Technik"

Springer Professional "Wirtschaft"

Weitere Artikel der Ausgabe 3/2018

Ethical Leadership and Its Cultural and Institutional Context: An Empirical Study in Japan

Ethical Leadership Perceptions: Does It Matter If You’re Black or White?

Leader Narcissism Predicts Malicious Envy and Supervisor-Targeted Counterproductive Work Behavior: Evidence from Field and Experimental Research

Destructive Leadership: A Critique of Leader-Centric Perspectives and Toward a More Holistic Definition

On the Price of Morals in Markets: An Empirical Study of the Swedish AP-Funds and the Norwegian Government Pension Fund

Internal Audit: Is the ‘Third Line of Defense’ Effective as a Form of Governance? An Exploratory Study of the Impression Management Techniques Chief Audit Executives Use in Their Annual Accountability to the Audit Committee

Premium Partner