Managers’ use of language in corrupt firms’ financial disclosures : Evidence from FCPA violators

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journalpeer-review

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Original languageEnglish
Pages (from-to)170-192
Journal / PublicationScandinavian Journal of Management
Issue number2
Online published23 May 2018
Publication statusPublished - Jun 2018


This paper explores management's use of language in financial disclosures of corrupt firms by looking at a sample of firms that have been prosecuted for violating the Foreign Corrupt Practices Act (FCPA). We find that the management of FCPA violators use more negative, less litigious, more complex and less conservative language when disclosing financials than non‐violators. The language effect prior to an FCPA prosecution is driven by firms with low corporate governance performance. By contrast, firms with high corporate governance use less complex and more conservative language before an FCPA prosecution than firms with low corporate governance performance. Furthermore, we find that after an FCPA prosecution the language becomes less litigious and complex than before the FCPA litigation.

Research Area(s)

  • Corruption, FCPA, Language, Text analysis, Tone

Bibliographic Note

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