The current uncertainty will be profitable to fossil giants in the US, too! I’m afraid to see what stocks of American FF and renewables will look like on Monday

Thanks, Vincent! 🙏

Thanks, Bob!

Thanks, Dan, very much appreciated!

We got excellent feedback while working on this. Our warmest thanks go to @fhollenbach.org, @nikhil-kalyanpur.bsky.social, @szakonyi.bsky.social, and @rorytruex.bsky.social for excellent early feedback 🙏 We also thank Daisuke Fukamizu and audiences at Kyoto University, UCLA, and Strathclyde 11/n

What’s next for the FCPA? In June, the DOJ revised priorities to “Safeguard Fair Opportunities for US Companies” and “Advance US National Security,” hinting the law could be further weaponized against non-US firms. We discuss likely consequences in the paper. www.justice.gov/dag/media/14... 10/n

This has important implications for corporate accountability and global governance. It suggests that anti-corruption laws like the FCPA shape not only legal risk, but also market discipline. The deregulatory approach of the current US administration may thus undercut desirable investor scrutiny. 9/n

Results show corruption’s costs largely stem from legal enforcement. Once Trump removed enforcement costs, investors viewed tainted firms as far more profitable. Suspending enforcement reshaped market incentives, effectively making (the risk of) bribery more “profitable.” 8/n

The effect was particularly strong for firms facing ongoing FCPA investigations, who stood to benefit the most from a pause of law enforcement, but we find it also for firms that were not threatened by legal actions at the time of the EO. 7/n

Our event study shows past FCPA defendants saw abnormal positive returns the days after Trump’s order. Comparable firms did not. For past FCPA targets, this translated into ~$39B in market-cap gains in a single day. After the EO, investors were betting on firms at risk of future FCPA actions. 6/n

We examined stock valuations of MNCs before and after the announcement. We compared past FCPA defendants (which have a higher risk of future FCPA actions in the long run) to similar firms never involved in FCPA cases. The first group should react more to the sudden removal of enforcement costs. 5/n

The FCPA is possibly the strongest policy against corporate bribery and a pillar of the OECD anti-corruption regime. Trump's Executive Order (EO) pausing FCPA enforcement signalled a willingness to let potential bribers off the hook. fcpa.stanford.edu/statistics-a... 4/n

We exploit a rare case that lets us separate the two. In February, President Trump paused enforcement of the FCPA, a 1977 US law against overseas bribery. This removed high legal-enforcement costs overnight while leaving corruption inefficiencies unchanged. www.theguardian.com/us-news/2025... 3/n

We ask a fundamental question in the corruption literature. Is corruption costly because it’s inefficient, or because of legal enforcement costs? The answer shapes what we think of anti-corruption rules. But in reality, it’s hard to disentangle inefficiencies from enforcement costs 2/n

TLDR: if we need markets to raise capital for financing renewable energy investment (and to move capital away from fossil), we cannot expect geopolitical actions (e.g., sanctions) to do the job. Unambiguous climate policies are the key. 3/3

We studied stock prices of energy firms after EU sanctions and green industrial policy announcements in the early days of the war in Ukraine.

Findings: all energy firms (fossil and renewable) benefit from sanctions. Only unambiguous climate investments (industrial policy) separate them. 2/3

Neither of the two pets looks too impressed