Do anti‐bribery laws reduce the cost of equity? Evidence from the UK Bribery Act 2010

Kim, Suhee; Rees, William; Sila, Vathunyoo

doi:10.1111/jbfa.12434

Cited by 7 publications

(7 citation statements)

References 64 publications

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“…(2009), Kim et al. (2020) find significant decreases in the cost of equity for UK firms with high bribery exposure after the passage of the UK Bribery Act 2010 since the Bribery Act improves corporate internal control. Francis et al.…”

Section: Prior Literature and Hypotheses Developmentmentioning

confidence: 99%

Independent director attention and the cost of equity capital

Huang

Wang

Xie

et al. 2021

Business Fin & Account

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We study the relation between independent director attention and the cost of equity capital. Masulis and Mobbs find that a director with multiple directorships distributes her time and effort (i.e., attention) unequally according to the relative prestige of each directorship. We investigate whether a firm's cost of equity capital reflects such unequal distribution of attention by its directors. We find that firms receiving more director attention are associated with a lower cost of equity capital. These firms also have higher accounting information quality. Moreover, the attention from audit committee directors matters more than that from other directors in reducing the cost of equity capital. Robustness checks show that the results are not driven by firm size. Overall, our evidence is consistent with director attention reducing the cost of equity capital through effective monitoring that increases accounting information quality.

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Section: Prior Literature and Hypotheses Developmentmentioning

confidence: 99%

Independent director attention and the cost of equity capital

Huang

Wang

Xie

et al. 2021

Business Fin & Account

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“…Innovative firms are more likely to pay bribes to government officials than noninnovative firms. In addition, Kim et al (2020) find that the UK Bribery Act of 2010 increased the exposure to bribery that grew the internal control system but reduced the cost of equity.…”

Section: Corruption Culturementioning

confidence: 99%

“…In addition, Kim et al. (2020) find that the UK Bribery Act of 2010 increased the exposure to bribery that grew the internal control system but reduced the cost of equity.…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

Board corruption and loan contracts

Robin

Huang

Lin

2022

Business Fin & Account

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In this study, we examine the effects of board corruption on the financing costs of firms. We construct an index of perceived corruption that uses the average level of corruption that is linked to a director's surname. The evidence shows that lending banks attach higher spreads and stricter covenants to the loan contracts of firms with high perceived board corruption. Specifically, when the perceived board corruption increases after mergers and acquisitions, firms are charged higher loan spreads. Further analysis shows that the effects of board corruption on financing costs become stronger when firms have weak governance mechanisms. These results show that banks recognize board corruption as a source of agency problem with borrowers when they make lending decisions.

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“…Second, our paper contributes to the broad literature on the effect of disclosure regulations or announcements on stock liquidity. Many researchers use liquidity as an outcome variable to understand the economic consequences of several regulations such as disclosure requirements (e.g., Bushee and Leuz, 2005;Bischof and Daske, 2013) or the passage of Bribery law (Kim et al, 2020). On the macro front, Chung et al (2013) report that liquidity decreases after monetary policy announcements in the U.S. markets.…”

Section: Introductionmentioning

confidence: 99%