FIRMS AND STATES IN GLOBAL MARKETS: TWO ESSAYS
Open AccessThis dissertation studies interactions between firms and governments in global markets where firms compete for a vital natural resource, oil. Two empirical essays discuss corporate governance, institutions and business-government relationships. Each explores how firms respond to external influences, such as bribe requests and government pressure, in international trade and investment. The first essay examines determinants of private-sector corruption in international trade, using the United Nations' Oil-for-Food Program as a natural laboratory. Under the Program, the Iraqi regime requested illicit surcharges from companies exporting oil, and some companies helped Iraq circumvent UN sanctions through bribe payment. The detailed bribe data published through an independent investigation allow me to investigate how firms react to bribe requests from a host government (Iraq) and why some pay bribes, while others do not. The analysis shows a significant positive relationship of the size of bribe to rent, a negative relationship to home-country financial transparency, a modest effect of a home country's implementation of the OECD Anti-Bribery Convention on firms' bribery decisions, and that a widely-used corruption perception index does not explain firm's illicit behavior abroad. The second essay explores a dimension of state capitalism wherein governments of some countries have a clearly defined goal - access to foreign oil reserves. Using transaction level data, I examine whether firms from resource-poor countries act in the interest of government policy for securing energy, and hence paying more for foreign reserves in cross-border acquisition. Several matching and event study analyses suggests little evidence of resource nationalism in foreign resource acquisition, implying home-country policy for energy security may not significantly influence business investment behavior as widely reported in the media. State capitalism and resource nationalism may be primarily talk, rather than action. Alternatively, they may be manifested in ways other than going abroad and buying resources at elevated prices. Further research would be needed to distinguish between these two interpretations.
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