Kicking back against kickbacks: An examination of the Foreign Corrupt Practices Act and US foreign investment

This paper studies the effect of the United States (US) Foreign Corrupt Practices Act (FCPA) on US multinational firms’ foreign direct investment (FDI). Unlike prior studies that focused on the passage of the FCPA, our study examines how the actual enforcement of the FCPA affects firms’ foreign investment decisions. We show that initial FCPA enforcement in a host country triggers MNEs to reassess their likelihood of being targeted, which in turn...