RT Journal Article
SR Electronic
T1 Corruption and International Valuation: <em>Does Virtue Pay?</em>
JF The Journal of Investing
FD Institutional Investor Journals
SP 23
OP 41
DO 10.3905/JOI.2009.18.4.023
VO 18
IS 4
A1 Charles M. C Lee
A1 David Ng
YR 2009
UL https://pm-research.com/content/18/4/23.abstract
AB Using firm-level data from 44 countries, the authors investigate the relation between corruption and international corporate values. The 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, the authors show that corruption impacts firm value primarily through lower expected future cash flows, most directly captured by firms’ profitability forecasts. Collectively, the evidence shows that corruption has significant economic consequences for shareholder value.TOPICS: Security analysis and valuation, global markets, statistical methods