Investment under anticorruption: Evidence from the high-profile anticorruption campaign in Vietnam

Given Vietnam's current anticorruption campaign and its distinctive context of decentralized governance and public sector dominance, this paper investigates how anticorruption efforts affect corporate investment behaviour during 2006 and 2019. Using a novel text-based measure of anticorruption and comprehensive firm-level datasets, we uncover a consistent pattern that firms tend to delay investments in response to heightened uncertainty triggered by anticorruption activities. This strategic hesitation reflects a rational response to avoid potential regulatory and political uncertainty, and holds across a wide range of robustness checks, including alternative model specifications, variable definitions, and advanced estimation techniques such as system GMM and entropy balancing. Our findings also reveal that anticorruption campaigns significantly reduce informal business costs—particularly bribery, thus highlighting institutional improvements and a more transparent business environment. Notably, while public sector investment efficiency improves under the campaign, private firms show no significant efficiency gains, underscoring the asymmetry in how reforms affect different ownership structures. By bridging institutional reform with corporate finance, the study offers new insights into the channels through which anticorruption influences firm decision-making, governance, and political strategy. This research fills a critical gap in the literature, demonstrating that anticorruption is not merely a legal or ethical issue, but a transformative force in corporate investment dynamics. • We investigate how firms invest under uncertainty induced by the anticorruption campaign of Vietnam using a novel text-based approach • Firms generally delay investment when anticorruption intensifies • Anticorruption seems to enhance investment efficiency in firms from the public sector but not in private firms • Anticorruption decreases firm-level bribery costs; however, the cost-reduction effect seems stronger for firms with political connections • We show the variations in the impact of anticorruption on corporate investment in the cross-sections of firms