Article Title
The Foreign Corrupt Practices Act and the Price, Volume, and Termination Rate of Cross-Border Mergers and Acquisitions
Abstract
Congress enacted the Foreign Corrupt Practices Act (FCPA) in 1977. It has since become an important factor in American firms decision-making in acquiring foreign targets, but its economic impact has gone largely unexamined. I analyze the influence of the risk of an enforcement action under the FCPA on the prices of cross-border mergers and acquisitions (CBMA). In a sample of 13,002 CBMA deals by American acquirers from 1996-2010, I find statistically significant results, suggesting that firms pay on average 3.9 – 5.1% less to acquire targets in countries with higher risk of attention from the FCPA.
This paper has been withdrawn.