Charles, Lee and David, Ng (2002): Corruption and International Valuation: Does Virtue Pay?
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Using firm-level data from 44 countries, we investigate the relation between corruption and international corporate values. Our analysis shows that firms from more corrupt countries trade at significantly lower market multiples. The effect is both economically and statistically significant. Furthermore, using a two-stage estimation procedure, we show that corruption impacts firm value primarily through lower expected future cash flows, most directly captured by firms’ profitability forecasts. Collectively, our evidence shows corruption has significant economic consequences for shareholder value.
|Item Type:||MPRA Paper|
|Original Title:||Corruption and International Valuation: Does Virtue Pay?|
|Keywords:||corruption; international valuation; market multiple|
|Subjects:||G - Financial Economics > G0 - General > G00 - General
G - Financial Economics > G3 - Corporate Finance and Governance
|Depositing User:||David Ng|
|Date Deposited:||27. Oct 2006|
|Last Modified:||15. Feb 2013 08:12|
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