Corruption Culture and Corporate Misconduct
58 Pages Posted: 14 Dec 2015 Last revised: 8 Sep 2016
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
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