Does Commitment to Anti-Corruption Matter?

Abstract

The Malaysian capital market regulators take great efforts to continuously enhance corporate governance codes and practices to improve transparent reporting and enhance board responsibility and investors’ protection. In 2017, the Malaysian Institute of Corporate Governance published a report assessing the transparency of reporting by top 100 listed companies in respect of anti-corruption, organizational disclosure, and sustainability. This study uses this unique set of data on scores on anti-corruption commitment, organizational transparency, and sustainability to investigate the association between corporate transparency and firm value, and whether political connections moderate this relationship. Not surprisingly, findings show that listed government-linked companies (GLCs) have higher scores than non-GLCs, such as family and foreign firms. Firms with enhanced anti-corruption commitment are more likely to have higher firm value, and this relationship is stronger for politically connected firms. The implications for investors and regulators are discussed in this paper.

Exploring the Firm Level Transparency and Its Impact on Firm Value

“…Enikolopov et al (2014) studied association of enterprise value and transparency in crisis of 2007-2009 and dependence of this relationship on the quality of institutions. Other studies tried to study the relationship of transparency & corruption (Devi, 2019). Audit committee, board size, annual general meetings & independent board directors are positively implied with enterprise performance (Khudhair et al, 2019).…”

“…Also theses indices consider board features and pattern of shareholding. There occurs positive undertone amid market value and corporate governance of a firm, regarding anti-corruption initiatives and better policy disclosure of firm rather than sustainability and financial disclosure (Devi et al, 2019).…”

“…It measures the market based performance of the organization, higher value of this ratio shows higher firm performance. This study has used Tobin's Q for measuring firm value in the market that is similar to research studies like (Devi et al, 2019;Javaid & Saboor 2015;Gharaibeh & Qader 2017). The value of firm (dependent variable), is proxied by Tobin's Q since it takes into consideration risk (Lindenberg & Ross, 1981).…”

“…The effective transparency mechanism of the firm leads toward growth and profitability (Nuskiya, Ekanayake, Beddewela & Meftah, 2021). Market regulators and academics both have realized importance of reliable and timely information (Devi, Ko & Subramaniam, 2019). Now transparency is not only limited to disclosing details regarding policies and corporate governance practices, instead it is more proactive and comprehensive disclosure.…”

The supply-side of corruption: a review of scenario, causes and prevention measure

“…The index was developed based on anti-corruption guidelines established by several NGOs, including the OECD, TI, United Nations and World Bank. The index is categorized by several themes as follows: accounting for combating corruption; board and senior management responsibilities; building human resources to combat corruption; responsible business relation; external Verification and assurance; codes of conduct; whistleblowing policies; action taken in response to corruption (Barkemeyer et al , 2015; Blanc et al , 2017; Islam et al , 2018; Issa and Alleyne, 2018; Joseph et al , 2016); corruption risk exposure; initiative in partnership with NGO (Branco and Matos, 2016); and commitment to compliance with anti-corruption law (Devi et al , 2019). …”