Document Type
Thesis
First Faculty Advisor
Cathy Zheng
Second Faculty Advisor
Asli Ascioglu
Keywords
import penetration; corporate misconduct; market competition; ethics
Publisher
Bryant University
Rights Management
CC - BY - NC - ND
Abstract
Import penetration from China is largely exogenous to the U.S. product market. Using this natural experiment, we find that heightened China import penetration curbs corporate misconduct of U.S. firms. The effect is more pronounced for firms with weaker corporate governance and firms more vulnerable to product market competition. The findings suggest that when import penetration increases, firms may improve corporate governance, and differentiate themselves through product innovation or corporate social responsibility to cope with the competition. In addition, we address the exogeneity concern derived from the influence of China value penetration. Furthermore, we find that competition related policies such as tariff reduction and U.S. granting China Permanent Normal Trade Relations (PNTR) status also lower corporate misconduct. Our work adds to the debates on competition and corporate misconduct at a cross-country competitive landscape.
Comments
This paper was originally written as an undergraduate Honors thesis project. A more in-depth version of the paper has since been published in an academic journal coauthored by Christopher Dupuis and Cathy Zheng.