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Do anti‐bribery laws reduce the cost of equity? Evidence from the UK Bribery Act 2010
Author(s) -
Kim Suhee,
Rees William,
Sila Vathunyoo
Publication year - 2020
Publication title -
journal of business finance and accounting
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.282
H-Index - 77
eISSN - 1468-5957
pISSN - 0306-686X
DOI - 10.1111/jbfa.12434
Subject(s) - equity (law) , cost of equity , business , market liquidity , monetary economics , stock (firearms) , accounting , finance , economics , law , cost of capital , microeconomics , profit (economics) , mechanical engineering , political science , engineering
We examine the impact of the UK Bribery Act 2010 on the implied cost of equity. We find a significant reduction in the cost of equity amongst UK firms with high bribery exposure after the passage of the Bribery Act. We further show that the Bribery Act improves internal control systems and increases stock liquidity of firms with high bribery exposure. Our results suggest that more stringent anti‐bribery regulations are not always bad for the firm.