Corruption Risk in the Defence Industry Around the World: Country Level and Firm Level Antecedents

56 Pages Posted: 22 Dec 2013 Last revised: 15 Feb 2014

See all articles by Chandrasekhar Krishnamurti

Chandrasekhar Krishnamurti

University of South Australia

Domenico Pensiero

University of Southern Queensland

Eswaran Velayutham

University of Southern Queensland

Date Written: December 21, 2013

Abstract

Anecdotal evidence indicates that corruption is rampant in the defence sector globally. Using a unique database on firm level corruption risk in the defence industry, we examine the role of country level and firm level antecedents. Among the country level factors we study are several measures of institutional quality, governance systems and legislative oversight, explicit mechanisms to control corruption and cultural factors such as power distance and uncertainty avoidance. Our empirical results confirm that these factors indeed influence firm level corruption risk. We also find that at the firm level, factors such as visibility, governance and shareholding play a significant role in affecting a firm’s corruption risk. The results of our study also show that the disclosure of corruption risk is associated with the mitigation of information asymmetry and consequent increase in firm level market liquidity.

Keywords: Corruption risk, governance systems, information asymmetry, market liquidity

JEL Classification: G34, H83, D73

Suggested Citation

Krishnamurti, Chandrasekhar and Pensiero, Domenico and Velayutham, Eswaran, Corruption Risk in the Defence Industry Around the World: Country Level and Firm Level Antecedents (December 21, 2013). Available at SSRN: https://ssrn.com/abstract=2370764 or http://dx.doi.org/10.2139/ssrn.2370764

Chandrasekhar Krishnamurti (Contact Author)

University of South Australia ( email )

37-44 North Terrace, City West Campus
Adelaide, South Australia 5001
Australia

Domenico Pensiero

University of Southern Queensland ( email )

P.O.Box 238 Darling Heights
Toowoomba, Queensland 4350
Australia

Eswaran Velayutham

University of Southern Queensland ( email )

P.O.Box 238 Darling Heights
Toowoomba, Queensland 4350
Australia

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
48
Abstract Views
596
PlumX Metrics