Giving Beyond Borders: Antibribery Enforcement and Philanthropic Giving Overseas
Weishi Jia, Albert Tsang, Danlei Bonnie Yu, Jingran ZhaoABSTRACT
Research Question/Issue
This study investigates why and how US multinational enterprises (MNEs) engage in philanthropic giving to foreign countries, exploring whether enforcement actions under the US Foreign Corrupt Practices Act (FCPA) influence such giving behavior.
Research Findings/Insights
Using FCPA enforcement actions as reputational and enforcement shocks, we find that while firms directly implicated in violations (focal firms) do not alter their foreign philanthropic giving, peer MNEs operating in the same host countries significantly increase their donations. This increase is consistent with peer firms using philanthropy strategically to mitigate reputational spillovers, manage heightened enforcement risk, and build reputational capital. We establish these findings using a stacked difference‐in‐differences design.
Theoretical/Academic Implications
The study advances the literature on corporate philanthropy by identifying cross‐border enforcement shocks and peer effects as key determinants of international corporate philanthropy. We further contribute to research on nonmarket strategies by demonstrating that philanthropy can serve as a strategic response to regulatory and reputational risks.
Practitioner/Policy Implications
Our findings suggest that antibribery enforcement can influence corporate social behavior beyond focal firms, prompting philanthropic responses among peer MNEs operating in the same host country. Policymakers and regulators should consider these spillover effects when designing enforcement strategies. Likewise, corporate practitioners should recognize international philanthropy as a strategic tool for managing global compliance and legitimacy.