Economic Policy Uncertainty and Corporate Scandals

Economic Policy Uncertainty and Corporate Scandals

• Autor
• Pedro Piccoli
• Co-autores
• Gregor Dorfleitner
• Resumo

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  Using a panel dataset of 5,197 non-financial firms from 26 countries, we investigate the link between economic uncertainty dynamics and corporate misconduct. We document that this relationship varies across levels of uncertainty. During periods of high (low) uncertainty, we find that increases in EPU reduce (enhance) misconduct. This dichotomic behavior may be explained by general scrutiny, as economic agents tend to be more attentive to firm-specific information during periods of heightened uncertainty, ultimately deterring firms’ opportunistic behavior. This conjecture is supported by our evidence that misconduct is more sensitive to EPU dynamics in the case of more visible firms (i.e., large firms, firms with greater analyst coverage, more leveraged firms, and firms in developed countries). Finally, we also report that ESG practices do not reduce wrongdoings in periods of low uncertainty.

   

• Palavras-chave
• Economic policy uncertainty, Corporate misconduct, Corporate Social Responsibility, ESG, Investor attention
• Modalidade
• E-pôster
• Área Temática
• Finanças Corporativas e Bancárias

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