We use Transparency International's ratings of self-reported anticorruption efforts to analyze factors underlying the ratings. Our tests examine whether these disclosures reflect firms' real efforts to combat corruption or are cheap talk. We find that the ratings are related to enforcement and monitoring, country and industry corruption risk, and governance variables. Controlling for these effects and other ratings determinants, we find that firms with lower residual ratings have higher subsequent citations in corruption news events. They also report higher future sales growth and show a negative relation between profitability change and sales growth in high corruption geographic segments, but not in low corruption segments. The net effect on valuation from sales growth and changes in profitability is close to zero. The findings are robust to a number of sensitivity tests, including analysis of disclosures for a larger sample over multiple years. We conclude that, on average, firms' disclosures signal real efforts to combat corruption.

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