scholarly journals Global Firms and Global Sheriffs? Why Territory Matters for Extraterritorial Enforcement of Regulatory Regimes

2021 ◽  
Author(s):  
Lorenzo Crippa

International regimes demand states regulate private companies to ensure better governance of markets. Although global firms can evade regulations creating complex ownership structures, a few countries enforce their laws extraterritorially. They prosecute firms regardless of their nationality, like “global sheriffs”. However, these countries only prosecute a fraction of the foreign firms under their jurisdiction. I study this phenomenon focusing on US extraterritorial prosecution. I argue that US authorities are more likely to prosecute foreign companies with US investment. Formally, this is no requirement for the application of American regulations. Yet, it exposes a foreign company to the local public opinion. US prosecutors exploit induced reputational cost to obtain cooperation and retrieve information to build a case. My empirics leverage novel firm-level data on law enforcement under the anti-bribery regime. US authorities are 0.26 more likely to investigate a suspect foreign company when it has investment in the US.

2017 ◽  
Vol 16 (3) ◽  
pp. 193-208 ◽  
Author(s):  
Zhao Chen ◽  
Sang-Ho Lee ◽  
Wei Xu

Using firm-level data from Changzhou, a prefectural city in China's Yangzi River Delta, we investigate the performance of both internal and external research and development (R&D) in high-tech firms. We find that, on average, high-tech firms with more internal R&D expenditure apply for more patents in terms of both the total number of patents and the number of invention patents. Internal R&D is most efficient in foreign firms, followed by private firms and then state-owned enterprises. These findings highlight the importance of privatizing high-tech firms in China if the government intends to accelerate industrial upgrading and convert the pattern of “Made in China” into “Created in China.”


2012 ◽  
Author(s):  
Mariann Rigo ◽  
Vincent Vandenberghe ◽  
Fábio Waltenberg

2019 ◽  
Vol 11 (1) ◽  
pp. 38-63 ◽  
Author(s):  
Youssef Benzarti ◽  
Dorian Carloni

This paper evaluates the incidence of a large cut in value-added taxes (VATs) for French sit-down restaurants in 2009. In contrast to previous studies, which only focus on the price effects of VAT reforms, we estimate the effects of the VAT cut on four groups: workers, firm owners, consumers, and suppliers of material goods. Using a difference-in-differences strategy on firm-level data, we find that: firm owners pocketed more than 55 percent of the VAT cut; consumers, sellers of material goods, and employees shared the remaining windfall with consumers benefiting the least; and the employment effects were limited. (JEL H22, H25, L83)


Author(s):  
Trung A Dang ◽  
Randall W Stone

Abstract We find firm-level evidence that US banks receive preferential treatment in countries under IMF conditionality. We rely on investment location decisions to infer firms’ expectations about future profits and find that US firms are approximately 53 percent more likely to acquire financial firms in countries under financial conditionality. IMF programs without financial conditionality and FDI in other sectors serve as placebo tests. Financial conditionality has weak effects on investment decisions by non-US firms, which implies a political-economy interpretation. Firm-level data indicate that the distinctive behavior of US firms is not due to advantages of scale or to a US-firm fixed effect, but to US influence in the IMF. Firms from other major IMF shareholders benefit as well, but the effects are much weaker. The effects are concentrated in the politically relevant firms that have local affiliates, which is consistent with the interpretation that firms lobby for preferential treatment.


2021 ◽  
Vol 69 ◽  
pp. 585-612
Author(s):  
Le Thanh Ha ◽  
To Trung Thanh ◽  
Doan Ngoc Thang ◽  
Pham Thi Hoang Anh

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