Corruption Culture and Corporate Misconduct

58 Pages Posted: 14 Dec 2015 Last revised: 8 Sep 2016

See all articles by Xiaoding Liu

Xiaoding Liu

Texas A&M University - Department of Finance

Date Written: December 30, 2015


Despite significant interest in corporate culture, there is little empirical research on its role in influencing corporate misconduct. Using cultural background information on key company insiders, I construct a measure of corporate corruption culture, capturing a firm’s general attitude toward opportunistic behavior. Firms with high corruption culture are more likely to engage in earnings management, accounting fraud, option backdating, and opportunistic insider trading. I further explore the inner workings of corruption culture and find evidence that it operates both as a selection mechanism and by having a direct influence on individual behavior.

Keywords: Corporate Culture, Corruption, Corporate Misconduct, Corporate Governance

Suggested Citation

Liu, Xiaoding, Corruption Culture and Corporate Misconduct (December 30, 2015). Available at SSRN: or

Xiaoding Liu (Contact Author)

Texas A&M University - Department of Finance ( email )

Texas A&M University
College Station, TX 77843
United States

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