On 10 February 2025, a significant shift in US anti-corruption policy prompted an immediate and substantial reaction in financial markets. When Donald Trump, President of the United States, signed an executive order suspending enforcement of the Foreign Corrupt Practices Act (FCPA), companies with a history of overseas corruption cases experienced sharp increases in their market valuations. On the day of the announcement alone, these firms collectively gained around USD 39 billion in market capitalisation. On average, each company previously investigated or sanctioned under the FCPA saw its value rise by approximately USD 160 million. One month later, the average gain per company had increased dramatically, reaching roughly USD 6.5 billion.
These findings come from a study published in the journal International Organization by Lorenzo Crippa of the University of Strathclyde, Edmund J. Malesky of Duke University, and Lucio Picci of the University of Bologna. Using rigorous statistical methods, the researchers examined changes in companies’ market valuations before and after the suspension of the Act to assess how investors responded to the removal of a key legal constraint on corporate behaviour abroad.
According to Lucio Picci, Professor of Economics at the University of Bologna, the market response highlights the central role of legal sanctions in deterring corruption. Once enforcement of the FCPA was suspended, companies already associated with corruption risks were rapidly re-evaluated by investors as more profitable opportunities. Picci warns that this development marks a sharp departure from the United States’ long-standing leadership in combating international corruption and could weaken global anti-corruption institutions by signalling a reduced commitment to enforcement.
The FCPA, enacted in 1977, was the first law of its kind worldwide, prohibiting US individuals and companies from bribing foreign officials to secure or maintain business relationships. Over time, it became a cornerstone of global anti-corruption efforts, shaping corporate conduct and influencing regulatory frameworks well beyond the United States. Its sudden suspension on 10 February 2025, without prior notice, created a natural experiment for analysing how markets react when a significant source of regulatory risk is abruptly removed.
The researchers focused on 261 companies listed on US stock exchanges that had previously been investigated or sanctioned for FCPA violations. Their market performance was compared with that of 236 similar firms that had never been subject to anti-corruption investigations. While President Trump justified the suspension by claiming the law disadvantaged US multinationals relative to foreign competitors, the data suggest otherwise. The benefits of the policy change were concentrated among companies already implicated in overseas corruption cases, while firms with no such history saw little comparable gain. On the day of the announcement, the average increase in market value for these firms was similar in size to typical fines imposed for FCPA violations, and the total gains far exceeded even the most significant penalties ever levied. The authors caution that weakening enforcement in the United States risks encouraging a broader decline in global anti-corruption efforts, with long-term consequences for market integrity and public trust.
More information: Lorenzo Crippa et al, Making Bribery Profitable Again? The Market Effects of Suspending Accountability for Overseas Bribery, International Organization. DOI: 10.1017/S0020818325100970
Journal information: International Organization Provided by Università di Bologna