But that's not the whole story. Where firms from signatory countries competed heavily against outside firms, we find leakage: there is a growing *negative* enforcement effect, compounded of compliance and leakage. As regulated firms reduced bribery, unregulated competitors increased it. 8/12

Results from a staggered DID are encouraging. Following the OECD Convention's transition into its intensive enforcement phase, firms from participating countries became significantly less likely to engage in foreign bribery. The Convention appears to have changed firms' behavior. 7/12

Markets paid attention to this change in enforcement priority. From June to, at least, December 2025, non-U.S. firms tainted by FCPA histories lost market value, while comparable U.S. firms gained about $10 per share, on average. That's about a 16% gain. 8/

The effect was particularly strong for firms facing ongoing FCPA investigations, who stood to benefit the most from a pause of law enforcement, but we find it also for firms that were not threatened by legal actions at the time of the EO. 7/n

Our event study shows past FCPA defendants saw abnormal positive returns the days after Trump’s order. Comparable firms did not. For past FCPA targets, this translated into ~$39B in market-cap gains in a single day. After the EO, investors were betting on firms at risk of future FCPA actions. 6/n

We examined stock valuations of MNCs before and after the announcement. We compared past FCPA defendants (which have a higher risk of future FCPA actions in the long run) to similar firms never involved in FCPA cases. The first group should react more to the sudden removal of enforcement costs. 5/n

The FCPA is possibly the strongest policy against corporate bribery and a pillar of the OECD anti-corruption regime. Trump's Executive Order (EO) pausing FCPA enforcement signalled a willingness to let potential bribers off the hook. fcpa.stanford.edu/statistics-a... 4/n

We exploit a rare case that lets us separate the two. In February, President Trump paused enforcement of the FCPA, a 1977 US law against overseas bribery. This removed high legal-enforcement costs overnight while leaving corruption inefficiencies unchanged. www.theguardian.com/us-news/2025... 3/n

Out of office

🚨I'm very happy to share that my article "Do corporate regulations deter or stimulate investment? The effect of the OECD anti-bribery convention on FDI" is now open access at @the-peio.bsky.social! Link: doi.org/10.1007/s115... polisky ipesky

Great opportunity for ipesky scholars who are planning on attending the next ISA Convention in San Francisco. I didn't see it anywhere on bluesy so I thought it better to post it myself. Deadline on November 1st! Polisky