The impact of corruption on market reactions to international strategic alliances

Abstract

Drawing on institutional theory, we argue that the level of corruption in an alliance partner’s country negatively affects the market reaction to a focal firm’s international strategic alliance announcement, as corruption creates uncertainty regarding the behavior of the partner firm. We further propose that anti-bribery laws in the focal firm’s home country strengthen the negative relation between corruption and market reactions, while the focal firm’s experiences in challenging institutional environments potentially attenuate the relationship. Our empirical analysis covers more than 1,000 international strategic alliance announcements involving firms from 30 countries. The findings indicate the importance of corruption as a facet of the institutional environment that shapes firms’ value creation opportunities and risks in international alliances.

Résumé

Dans la perspective de la théorie institutionnelle, nous argumentons que le niveau de corruption dans le pays d’un partenaire de l’alliance impacte négativement la réaction du marché à l’annonce de l’alliance stratégique internationale d’une entreprise focale, car la corruption crée l’incertitude relative au comportement de l’entreprise partenaire. Nous proposons en outre que les lois anti-corruption dans le pays d’origine de l’entreprise focale renforcent la relation négative entre la corruption et les réactions du marché, tandis que les expériences de l’entreprise focale dans des environnements institutionnels difficiles atténuent potentiellement la relation. Notre analyse empirique s’appuie sur plus d'un millier d'annonces d'alliances stratégiques internationales impliquant des entreprises de 30 pays. Les résultats indiquent l’importance de la corruption comme une facette de l’environnement institutionnel, laquelle façonne les opportunités de création de valeur des entreprises ainsi que leurs risques liés aux alliances internationales.

Resumen

Basándonos en la teoría institucional, argumentamos que el nivel de corrupción en un país de un socio de la alianza afecta negativamente la reacción de mercado frente al anuncio de la alianza estratégica internacional de una empresa coordinadora, debido a que la corrupción crea incertidumbre en relación con el comportamiento de la empresa aliada. Proponemos además que las leyes anti-soborno en los países de origen de la empresa coordinadora fortalezcan la relación negativa entre la corrupción y la reacción del mercado, mientras que las experiencias de la empresa coordinadora en ambientes potencialmente desafiantes atenúan la relación. Nuestro análisis empírico cubre más de mil anuncios de alianzas estratégicas internacionales en los que participan empresas de más de 30 países. Los hallazgos indican la importancia de la corrupción como una faceta del entorno institucional que da forma a las oportunidades y riesgos de creación de valor de las empresas en las alianzas internacionales.

Resumo

Com base na teoria institucional, argumentamos que o nível de corrupção no país de um parceiro de uma aliança afeta negativamente a reação do mercado ao anúncio de uma aliança estratégica internacional de uma empresa, uma vez que a corrupção cria incerteza quanto ao comportamento da empresa parceira. Propomos ainda que as leis antisuborno no país de origem da empresa fortaleçam a relação negativa entre corrupção e reações do mercado, enquanto as experiências da empresa em ambientes institucionais desafiadores potencialmente atenuam a relação. Nossa análise empírica cobre mais de mil anúncios de alianças estratégicas internacionais envolvendo empresas de 30 países. Os resultados indicam a importância da corrupção como uma faceta do ambiente institucional que molda oportunidades de criação de valor das empresas e os riscos em alianças internacionais.

摘要

借鉴制度理论, 我们认为联盟合伙人所在国家的腐败程度会对焦点企业宣布国际战略联盟公告的市场反应产生负面影响, 因为腐败会导致伙伴公司行为的不确定性。我们进一步提出, 焦点企业母国的反贿赂法律会加强腐败与市场反应之间的负面关系, 而焦点企业在具有挑战性的制度环境中的经验潜在地削弱这种关系。我们的实证分析涵盖了来自30个国家的企业的1000多个国际战略联盟公告。研究结果表明, 腐败作为制度环境一个方面的重要性, 而制度环境在国际联盟中塑造企业价值创造的机会和风险。

Appendix 1: Second-stage equation results of the Heckman two-step regression analysis

Variable		Model 1		Model 2		Model 3		Model 4		Model 5		Model 6
		Est.	p value	Est.	p value	Est.	p value	Est.	p value	Est.	p value	Est.	p value
Partner country's corruption	(H1)			− 0.014	0.048	− 0.008	0.310	− 0.015	0.032	− 0.013	0.049	− 0.009	0.278
				(0.007)		(0.008)		(0.006)		(0.006)		(0.009)
Corruption X anti-bribery law	(H2)					− 0.011	0.028					− 0.011	0.098
						(0.005)						(0.006)
Corruption X alliance experience	(H3)							0.003	0.000			0.004	0.000
								(0.001)				(0.001)
Corruption X focal country's corruption	(H4)									0.003	0.105	0.003	0.249
										(0.002)		(0.002)
Anti-bribery law		0.006	0.769	0.009	0.666	0.010	0.643	0.010	0.646	0.009	0.662	0.011	0.614
		(0.021)		(0.021)		(0.021)		(0.021)		(0.021)		(0.021)
Alliance experience		− 0.001	0.532	0.000	0.641	0.000	0.658	− 0.001	0.218	0.000	0.663	− 0.001	0.164
		(0.001)		(0.001)		(0.001)		(0.001)		(0.001)		(0.001)
Focal country's corruption		− 0.004	0.424	− 0.005	0.331	− 0.006	0.248	− 0.005	0.318	− 0.005	0.302	− 0.006	0.222
		(0.005)		(0.005)		(0.005)		(0.005)		(0.004)		(0.005)
Partner's anti-bribery law		− 0.012	0.409	− 0.015	0.364	− 0.016	0.340	− 0.015	0.325	− 0.015	0.365	− 0.017	0.293
		(0.015)		(0.016)		(0.016)		(0.015)		(0.016)		(0.016)
Industry relatedness		0.004	0.503	0.004	0.516	0.004	0.524	0.005	0.505	0.004	0.525	0.004	0.517
		(0.006)		(0.006)		(0.006)		(0.007)		(0.006)		(0.007)
Revenue		− 0.007	0.001	− 0.008	0.001	− 0.008	0.000	− 0.007	0.002	− 0.008	0.000	− 0.008	0.001
		(0.002)		(0.002)		(0.002)		(0.002)		(0.002)		(0.002)
Partner's revenue		0.009	0.071	0.009	0.066	0.009	0.060	0.009	0.062	0.009	0.063	0.009	0.051
		(0.005)		(0.005)		(0.005)		(0.005)		(0.005)		(0.004)
Return on assets		− 0.015	0.013	− 0.016	0.012	− 0.016	0.009	− 0.016	0.010	− 0.016	0.012	− 0.016	0.008
		(0.006)		(0.006)		(0.006)		(0.006)		(0.006)		(0.006)
Partner's return on assets		0.001	0.788	0.001	0.776	0.001	0.783	0.001	0.817	0.001	0.789	0.001	0.849
		(0.003)		(0.003)		(0.003)		(0.003)		(0.003)		(0.003)
Market capitalization		0.004	0.057	0.004	0.050	0.004	0.039	0.003	0.123	0.004	0.032	0.003	0.090
		(0.002)		(0.002)		(0.002)		(0.002)		(0.002)		(0.002)
Partner's market cap		− 0.001	0.908	0.000	0.949	0.000	0.940	0.000	0.966	0.000	0.937	0.000	0.952
		(0.006)		(0.006)		(0.006)		(0.006)		(0.006)		(0.006)
Debt-to-assets ratio		− 0.007	0.050	− 0.007	0.045	− 0.007	0.034	− 0.007	0.049	− 0.007	0.047	− 0.007	0.040
		(0.003)		(0.003)		(0.003)		(0.003)		(0.003)		(0.003)
Partner's debt to assets		− 0.001	0.397	− 0.001	0.598	− 0.001	0.636	− 0.001	0.635	− 0.001	0.600	− 0.001	0.685
		(0.001)		(0.001)		(0.001)		(0.001)		(0.001)		(0.002)
Technology transfer		0.004	0.794	0.006	0.695	0.007	0.617	0.006	0.683	0.006	0.675	0.008	0.588
		(0.015)		(0.015)		(0.014)		(0.015)		(0.014)		(0.014)
Partner's alliance experience		0.004	0.269	0.004	0.260	0.005	0.216	0.005	0.252	0.005	0.240	0.005	0.190
		(0.004)		(0.004)		(0.004)		(0.004)		(0.004)		(0.004)
Prior ties		0.015	0.269	0.014	0.291	0.014	0.321	0.013	0.351	0.014	0.296	0.011	0.407
		(0.014)		(0.013)		(0.013)		(0.014)		(0.013)		(0.014)
Political risk		− 0.001	0.650	− 0.002	0.605	− 0.001	0.586	− 0.002	0.564	− 0.001	0.660	− 0.001	0.581
		(0.003)		(0.003)		(0.003)		(0.003)		(0.003)		(0.002)
GDP per capita		− 0.004	0.201	− 0.004	0.167	− 0.004	0.132	− 0.004	0.197	− 0.004	0.114	− 0.004	0.109
		(0.003)		(0.003)		(0.003)		(0.003)		(0.003)		(0.003)
Population		− 0.007	0.051	− 0.006	0.095	− 0.006	0.087	− 0.006	0.116	− 0.006	0.075	− 0.006	0.090
		(0.003)		(0.003)		(0.003)		(0.003)		(0.003)		(0.003)
Cultural similarity		− 0.005	0.568	− 0.006	0.512	− 0.007	0.462	− 0.007	0.519	− 0.007	0.497	− 0.007	0.457
		(0.009)		(0.01)		(0.009)		(0.01)		(0.01)		(0.009)
Common legal origins		0.010	0.066	0.011	0.065	0.011	0.052	0.011	0.061	0.011	0.060	0.011	0.043
		(0.005)		(0.006)		(0.006)		(0.006)		(0.006)		(0.005)
Geographic distance		0.003	0.361	0.003	0.371	0.005	0.216	0.003	0.423	0.005	0.226	0.005	0.149
		(0.004)		(0.004)		(0.004)		(0.004)		(0.004)		(0.003)
Knowledge distance		− 0.003	0.474	− 0.002	0.627	− 0.002	0.590	− 0.002	0.668	− 0.003	0.545	− 0.002	0.560
		(0.004)		(0.004)		(0.004)		(0.004)		(0.004)		(0.004)
Lambda		− 0.014	0.642	− 0.017	0.575	− 0.019	0.517	− 0.018	0.558	− 0.017	0.574	− 0.020	0.496
		(0.030)		(0.030)		(0.028)		(0.031)		(0.030)		(0.029)
Intercept		− 0.014	0.652	0.022	0.449	0.036	0.224	0.030	0.321	0.029	0.339	0.052	0.099
		(0.030)		(0.029)		(0.029)		(0.030)		(0.030)		(0.030)
Observations		1,087		1,087		1,087		1,087		1,087		1,087
R-squared		16.65 %		16.84 %		17.06 %		17.16 %		16.94 %		17.56 %