Bribery pays—if you don’t get caught

MANY BIG companies may be struggling with depressed sales, but these are busy times for bribery-busters. Mexico is abuzz over allegations by an ex-boss of Pemex, the state oil giant, that several senior politicians received bungs from companies including Odebrecht, a Brazilian construction firm (see article). The scandal is the latest in a string of graft cases to make headlines this year, starting with Airbus’s record $4bn settlement in January over accusations of corruption for making illegal payments in various countries.

Corporate bribery is hardly new. In surveys, between a third and a half of companies typically claim to have lost business to rivals who won contracts by paying kickbacks. But such perceptions-based research has obvious limitations. A new study takes a more rigorous approach, and draws some striking conclusions.

Raghavendra Rau of Judge Business School at the University of Cambridge, Yan-Leung Cheung of the Education University of Hong Kong and Aris Stouraitis of Hong Kong Baptist University examined nearly 200 prominent bribery cases in 60 countries between 1975 and 2015. For the firms doing the bribing, they found, the short-term gains were juicy: every dollar of bribe translated into a $6-9 increase in excess returns, relative...

via Business Feeds

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