Corruption Risk in the Defence Industry: Drivers and Stock Market Effects

58 Pages Posted: 11 Feb 2016

See all articles by Chandrasekhar Krishnamurti

Chandrasekhar Krishnamurti

University of South Australia

Domenico Pensiero

University of Southern Queensland

Eswaran Velayutham

University of Southern Queensland

Multiple version iconThere are 2 versions of this paper

Date Written: February 1, 2016

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 drivers. Our empirical results indicate that at the firm level, factors such as visibility, governance and shareholding play a significant role in affecting a firm’s corruption risk. These results hold even after controlling for country level drivers such as institutional quality, cultural and economic factors. 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.

Suggested Citation

Krishnamurti, Chandrasekhar and Pensiero, Domenico and Velayutham, Eswaran, Corruption Risk in the Defence Industry: Drivers and Stock Market Effects (February 1, 2016). Asian Finance Association (AsianFA) 2016 Conference, Available at SSRN: https://ssrn.com/abstract=2725626 or http://dx.doi.org/10.2139/ssrn.2725626

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

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