Investment Under Anticorruption: Evidence From the High-Profile Anticorruption Campaign in Vietnam

This paper investigates the anticorruption on corporate investment decision-making during 2006-2019 in Vietnam, a country characterized by a socialist-orientation economy and the dominance of the public sector. By using a text-based measure of anticorruption and various firm datasets, we find some interesting findings. First, anticorruption-related uncertainty immediately reduces corporate investment, however, the effect reverses after two years, and diminishes in the long-run. Second, corporate bribery spending decreases under intensified anticorruption, suggesting that the anticorruption campaign of the Vietnamese government seems to have an enhancing effect on Vietnam’s business environment. Third, anticorruption increases investment efficiency for firms in the public sector, but not for other firms. Further, the effect of anticorruption on corporate investment is more pronounced in financially constrained firms and in firms with more investment irreversibility. Additionally, politically connected firms show their advantage in bribery efficiency to others even when anticorruption intensifies. Our findings are robust to a battery of sensitivity tests and endogeneity control.