Political corruption shielding and corporate acquisitions
Ashrafee Tanvir Hossain
Faculty of Business Administration, Memorial University of Newfoundland, St. John's, Newfoundland and Labrador, Canada
Search for more papers by this authorCorresponding Author
Lawrence Kryzanowski
Department of Finance, John Molson School of Business, Concordia University, Montreal, Quebec, Canada
Correspondence
Lawrence Kryzanowski, Department of Finance, John Molson School of Business, Concordia University, 1455 de Maisonneuve Blvd West, Montreal, QC H3G 1M8.
Email: lawrence.kryzanowski@concordia.ca
Search for more papers by this authorAshrafee Tanvir Hossain
Faculty of Business Administration, Memorial University of Newfoundland, St. John's, Newfoundland and Labrador, Canada
Search for more papers by this authorCorresponding Author
Lawrence Kryzanowski
Department of Finance, John Molson School of Business, Concordia University, Montreal, Quebec, Canada
Correspondence
Lawrence Kryzanowski, Department of Finance, John Molson School of Business, Concordia University, 1455 de Maisonneuve Blvd West, Montreal, QC H3G 1M8.
Email: lawrence.kryzanowski@concordia.ca
Search for more papers by this authorAbstract
Corruption includes rent-seeking behavior by public officials (e.g., lavish in-kind benefits and monetary kickbacks for contracts/permits/regulatory leniency, improper political contributions/support, etc.) that can negatively affect firm valuations, performances, and strategic choices. Shielding strategies are used to diminish rent-seeking attractiveness of firms. Acquisitions provide a better channel than cash or leverage for assessing the wealth effects of shielding strategies. We find that the mean 3-day announcement returns for acquirers for a large sample of U.S. domestic acquisitions between 1990 and 2014 is significantly lower for firms headquartered in relatively higher corruption states. Our results survive an array of robustness tests.
CONFLICT OF INTEREST
The authors declare no conflict of interest.
Supporting Information
Filename | Description |
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fire12247-sup-0001-OnlineAppendix.docx63 KB |
Table A.1 Sample by industry and by year Table A.2 Robustness check: Various subsample tests Table A.3 Pearson correlation matrix Table A.4 Alternate variations of our corruption measure Table A.5 High versus low isolation capital univariate tests Table A.6 High versus low social capital univariate tests |
Please note: The publisher is not responsible for the content or functionality of any supporting information supplied by the authors. Any queries (other than missing content) should be directed to the corresponding author for the article.
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