Political corruption, Dodd–Frank whistleblowing, and corporate investment

Political ties and raising capital in global markets: Evidence from Yankee bonds

“…For instance, Dimitrov et al (2015), Toscano (2020), and Huang et al (2021) show that the issuance and demand for credit ratings were significantly affected by the passage of the law. Du and Heo (2021) also show that the Dodd-Frank Act may have led to reduced corruption which affected corporate investment across US states. Most importantly, financial regulation has generally become more stringent after Dodd-Frank leaving less room for international political considerations to play a role.…”

Fiscal monitoring and corporate investment

“…D. Johnson et al, 2011) or because corruption increases the risk of expropriation (Du & Heo, 2022;Ellis et al, 2020;Murphy et al, 1993). Moreover, local corruption could lead to firms substituting investment with rent-seeking activities (Q.…”

“…Huang & Yuan, 2021), our first proxy for a firm's vulnerability to corruption is the geographic dispersion of a firm. Du and Heo (2022) posit that firms that are geographically far from the state capital are less vulnerable to corruption as they are less politically visible. In contrast, firms that are geographically close to the state capital are more politically visible and thus more vulnerable to political corruption.…”

“…Moreover, state monitoring lowers local corruption (Nakhmurina, 2020), and lower corruption could result in firms decreasing their investment (Leff, 1964; Lui, 1985). On the other hand, lower local corruption could also lead to higher corporate investment (Du & Heo, 2022; N. D. Johnson et al., 2011). In addition, fiscal monitoring reduces local government debt (Nakhmurina, 2020), and lower local government debt could increase corporate investment (Y. Huang et al., 2020).…”

“…Scaled Corruption is Corruption divided by the 2000 Census population (in millions) of the Attorney's Office district. All continuous, non-logarithm variables are winsorized at the 1% and 99% levels Du and Heo (2022),. we generate the dummy Close that is equal to 1 if the observation's distance to the state capital is below the median distance to the state capital of all observations in the same state and the same year.…”