Disclosure Standards, Auditing Infrastructure, and Bribery Mitigation

41 Pages Posted: 10 May 2011 Last revised: 1 May 2013

See all articles by Samer Khalil

Samer Khalil

American University of Beirut

Walid Saffar

Hong Kong Polytechnic University - School of Accounting and Finance

Samir Trabelsi

Brock University - Accounting

Date Written: May 1, 2013

Abstract

Using a sample of 15,174 firms from 24 countries included in the 2009 World Bank Enterprise Survey, we investigate the impact of disclosure standards and auditing infrastructure on firm-level corruption. We find that firms are less likely to grant gift to secure a government contract in countries having more extensive financial reporting requirements and countries where audit firms face a higher litigation and sanction risk. Findings also show that firms are less likely to bribe bureaucrats in case financial statements are reviewed by an external audit firm. Our results are economically significant and are robust to several sensitivity analyses. These findings support certain policies that currently being implemented or discussed to mitigate corruption.

Keywords: auditing infrastructure; corruption; disclosure standards; litigation risk

JEL Classification: M41, G30, G38

Suggested Citation

Khalil, Samer K. and Saffar, Walid and Trabelsi, Samir, Disclosure Standards, Auditing Infrastructure, and Bribery Mitigation (May 1, 2013). Canadian Academic Accounting Association 2011. Available at SSRN: https://ssrn.com/abstract=1837552 or http://dx.doi.org/10.2139/ssrn.1837552

Samer K. Khalil

American University of Beirut ( email )

Suliman S. Olayan School of Business
P.O.Box 11-0236
Beirut 1107 2020, Riad El-Solh
Lebanon

Walid Saffar

Hong Kong Polytechnic University - School of Accounting and Finance ( email )

Li Ka Shing Tower
Hong Hum
Kowloon
Hong Kong

Samir Trabelsi (Contact Author)

Brock University - Accounting ( email )

St. Catharines, Ontario L2S 3A1
Canada

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