In‐Group Favoritism as Legal Strategy: Evidence from FCPA Settlements

Anti-corruption laws aim to bolster public integrity by punishing attempts illegitimately curry favor with government decision-makers. These laws, however, can generate risks of their own. This article examines one such risk: that firms subject scrutiny under the Foreign Corrupt Practices Act (FCPA) may attempt influence prosecutors exploiting shared political leanings or related socio-cultural ties. Drawing on social psychology, we theorize FCPA defendants retain defense attorneys who are aligned officials. behavior is consistent a strategy marshaling in-group favoritism—i.e., psychological tendency for individuals view more favorably those they perceive as members same group—to defendants' advantage. be particularly auspicious in matters, which engage subjective, trust-based assessments self-investigatory efforts, typically minimal judicial oversight. We test this theory matching listed court filings all matters over eighteen years database individuals' views based patterns donations. analysis reveals tend hire liberal represent them these when lean left and during Democratic administrations, conservative right Republican presidencies. In light findings, offer policy prescriptions aimed at increasing transparency oversight mitigate risks.