Thesis
Essays on language, leniency laws, and corporate environmental and financial decisions
- Creator
- Rights statement
- Awarding institution
- University of Strathclyde
- Date of award
- 2026
- Thesis identifier
- T18154
- Person Identifier (Local)
- 202165558
- Qualification Level
- Qualification Name
- Department, School or Faculty
- Abstract
- This thesis consists of three empirical studies that examine how informal institutions and regulatory enforcement shape corporate environmental and financial decisions. The first study investigates whether cross-country differences in linguistic time encoding explain variation in corporate carbon emissions. Drawing on the distinction between weak and strong future-timereference (FTR) languages, the analysis tests whether firms operating in environments that emphasise future outcomes exhibit lower emissions. Using a global sample of firms from 33 countries over the period 2001 to 2021, the findings show that firms in weak-FTR linguistic settings tend to produce lower carbon emissions. This relationship remains robust to alternative specifications and additional analyses, including within-country tests that help isolate the effect of language from broader institutional factors. The second study examines how exposure to foreign antitrust leniency laws affects corporate investment behaviour among U.S. firms. Leniency programmes increase the expected detection risk of collusion by encouraging cartel members to self-report, thereby weakening collusive arrangements and intensifying product market competition. Using firmlevel data from 1990 to 2021, I construct an import-weighted measure of foreign leniency exposure and estimate two-way fixed-effects models to assess its effect on investment outcomes. The results show that firms exposed to stronger foreign leniency enforcement increase total investment and improve investment efficiency, primarily through a reduction in underinvestment. At the same time, the evidence also indicates higher levels of overinvestment under intensified competition. Overall, the investment findings are consistent with foreign leniency laws mitigating the managerial “quiet life” and encouraging firms to exert greater effort by pursuing investment opportunities and reducing underinvestment. These findings remain robust across alternative specifications, measures, and additional robustness analyses, and highlight the role of competition policy in shaping investment behaviour and capital allocation. The third study examines how foreign antitrust leniency laws influence the financing decisions of U.S. firms, with a particular focus on debt maturity structure. By increasing the expected detection risk of collusion and weakening collusive arrangements, leniency programmes intensify product market competition and increase the importance of financial flexibility. Using Compustat North America data from 1990 to 2021, I construct an import-weighted measure of foreign leniency exposure and estimate firm-level fixed-effects models to assess its impact. The results show that greater exposure to foreign leniency laws is associated with shorter debt maturity and reduced reliance on long-term debt, consistent with firms adopting more flexible financing structures. Additional analysis indicates that this effect is stronger among financially constrained firms and weaker among firms with stronger profitability, greater liquidity, and more dynamic product market environments. I also find that foreign leniency exposure slows the speed at which firms adjust toward their target leverage. Overall, the findings highlight how foreign antitrust enforcement influences corporate financing through intensified competitive pressure. Taken as a whole, the findings of the three studies demonstrate that both linguistic characteristics and antitrust enforcement play an important role in shaping corporate behaviour. Importantly, the investment and financing responses to foreign leniency exposure are complementary rather than contradictory. By intensifying competition and mitigating the managerial “quiet life,” foreign leniency laws induce firms to work harder, reflected in higher investment and reduced underinvestment, while at the same time encouraging more cautious and prudent financing choices. Together, these findings suggest that stronger competitive discipline encourages firms to make more considered decisions across both their investment and financing policies. By linking language, competition policy, and firm-level decisions, this thesis provides new evidence on how institutional and competitive forces influence environmental outcomes, investment behaviour, and corporate financing decisions in an increasingly integrated global economy.
- Advisor / supervisor
- Loukopoulos, Panagiotis
- Hass, Lars
- Resource Type
- DOI
- Funder
Relations
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