The Effect of Corporate Governance on the Corruption of Firms in BRICs (Brazil, Russia, India & China)

Abstract

This study examines the correlation between corporate governance and corruption (firm bribery) using 8885 firms in four emerging economies: Brazil, Russia, India, and China (BRICs). The sample firms are collected from the World Bank Enterprise Survey database. To estimate the corruption of a firm, a logistics regression is used. The dependent variable of the logistics regression is a dummy variable on firm bribery while the test variables are a corporate governance metric composed of an ownership structure proxied by the percentage of the largest ownership and that of foreign ownership, Chief Executive Officer (CEO) characteristics proxied by CEO gender and CEO experience in the same sector, and an external audit on a firm's financial statements. We find that firm bribery is negatively associated with the percentage of the largest ownership and external audit on financial statements, but is positively related to CEO experience. These results suggest that increases in the largest ownership, external audits on financial statements, and a shorter tenure of a CEO in the same sector are negatively associated with firm bribery in BRICs.

Governança Corporativa E Conexões Políticas Nas Práticas Anticorrupção

“…With regard to audit characteristics, audit committee size and being audited by one of the Big Four auditing firms proved significant, which allows inferring that companies with these conditions have a higher level of disclosure of anti-corruption practices. This result is consistent with the findings of Malagueño Na et al (2018). In addition, CG has used CSR to minimize agency conflicts, through the disclosure of anti-corruption practices, as suggested by Malagueño et al (2010).…”

“…Another relevant aspect about CG is external audit, which constitutes a control device for monitoring and detecting bribery (Na et al, 2018), with the role of ensuring information reliability, thus reducing informational risk (Malagueño et al , 2010).…”

“…With regard to countries, Malagueño et al (2010) investigated 57 jurisdictions and indicated that improving accounting and auditing quality can help reduce corruption. In the organizational sphere, Na et al (2018) showed that elements of CG impacted corruption prevention in companies in Brazil, Russia, India and China (BRIC).…”

“…CG mechanisms are essential in detecting and monitoring corporate corruption (Agyei-Mensah, 2017; Frías-Aceituno, Rodríguez-Domínguez, & García-Sánchez, 2014;Malagueño, Albrecht, Ainge, & Stephens, 2010;Na, Kang, & Kim, 2018;Owolabi, 2011;Wu, 2005), and the fight against it is an important attribute of CSR (Branco & Delgado, 2012;Hills, Fiske, & Mahmud, 2009;Hoi & Lin, 2012). Thus, the fight against corruption must be supported by CG mechanisms by means of CSR practices (Malagueño et al, 2010).…”

Key challenges facing metropolitan cities or municipalities in managing competitive advantage through technology and innovation

“…Considering these contemporary explanations on technological innovations and its implications on competitiveness, early scholarly articles also raise similar arguments. In fact, current scholarly articles on technological innovation build upon early works on this subject (Na, Kang & Kim 2018). Schumpeter and Redvers (1934) talked about innovation as involving new products and services, new methods of producing and distributing goods, new sources of customers and suppliers, exploration of new markets and new organisation of businesses.…”