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Reputational Penalties To Firms In Antitrust Investigations

Author

Listed:
  • Stijn van den Broek
  • Ron G.M. Kemp
  • Willem F.C. Verschoor
  • Anne-Claire de Vries

Abstract

We estimate the impact of legal penalties imposed on Dutch listed firms targeted by competition authorities from 1998 to 2008 on a firm's stock market value. On average, firms lose 2.3 percent of their market values when an antitrust investigation is uncovered. This corresponds to a total value loss of €4.3 billion. Overall, the fines imposed by the legal system contribute to only 12 percent of this total value loss. Another 55 percent of the total value loss is explained by the lost conspiracy-generated profits. We find that the residual 33 percent of the total value loss is explained by reputation loss. Thus, cartel offenders are disciplined largely through market-induced reputational penalties, not through legal penalties.

Suggested Citation

  • Stijn van den Broek & Ron G.M. Kemp & Willem F.C. Verschoor & Anne-Claire de Vries, 2012. "Reputational Penalties To Firms In Antitrust Investigations," Journal of Competition Law and Economics, Oxford University Press, vol. 8(2), pages 231-258.
    • Handle: RePEc:oup:jcomle:v:8:y:2012:i:2:p:231-258.
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    File URL: http://hdl.handle.net/10.1093/joclec/nhs008
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    Citations

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    Cited by:

    1. Jiménez, Juan Luis & Perdiguero, Jordi & Gutiérrez, Inmaculada, 2022. "Bias in media coverage of antitrust actions," International Review of Law and Economics, Elsevier, vol. 72(C).
    2. Peter T. Dijkstra & Jonathan Frisch, 2018. "Sanctions and Leniency to Individuals, and its Impact on Cartel Discoveries: Evidence from the Netherlands," De Economist, Springer, vol. 166(1), pages 111-134, March.
    3. Amore, Mario Daniele & Marzano, Riccardo, 2019. "Family Ownership and Antitrust Violations," CEPR Discussion Papers 14018, C.E.P.R. Discussion Papers.

    More about this item

    JEL classification:

    • G1 - Financial Economics - - General Financial Markets
    • K2 - Law and Economics - - Regulation and Business Law

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