Corruption, Corporate Social Responsibility and Financial Constraints: International Firm‐Level Evidence

19 Pages Posted: 12 Apr 2017

See all articles by Reemda Jaeschke

Reemda Jaeschke

University of Oldenburg - Accounting and Corporate Governance

Magdalena Tchikov

University of Oldenburg

Sumit K. Lodhia

Australian National University (ANU) - Faculty of Economics & Commerce

Kerstin Lopatta

University of Oldenburg - Accounting and Corporate Governance

Date Written: Spring 2017

Abstract

This study examines the relationship between firm‐level factors including corporate social responsibility (CSR) performance and financial constraints, and the firm‐level risk of corruption. Facing a measurement challenge referring to firm‐level risk of corruption, we define a corruption score based on corporate disclosures of corrupt activities. We show that, first, CSR performance is negatively related to the risk of corporate corruption. Second, a firm's vulnerability to financial constraints is positively related to the risk of corporate corruption. Third, the effects are particularly strong for firms with low board independence. Finally, we contribute to prior literature by developing the first firm‐level corruption score that is not only robust to prevalent corruption indices but is also applicable to any dataset and can be used for future research on firm‐level corruption. Moreover, the study provides new empirical evidence on firm‐level determinants that relate to corporate corruption risk.

Keywords: corruption, corporate social responsibility, financial constraints, transparency, content analysis

Suggested Citation

Jaeschke, Reemda and Tchikov, Magdalena and Lodhia, Sumit K. and Lopatta, Kerstin, Corruption, Corporate Social Responsibility and Financial Constraints: International Firm‐Level Evidence (Spring 2017). European Management Review, Vol. 14, Issue 1, pp. 47-65, 2017. Available at SSRN: https://ssrn.com/abstract=2950828 or http://dx.doi.org/10.1111/emre.12098

Reemda Jaeschke

University of Oldenburg - Accounting and Corporate Governance ( email )

Ammerländer Heerstraße 114-118
Oldenburg, DE D-26111
Germany

Magdalena Tchikov

University of Oldenburg ( email )

Ammerländer Heerstraße 114-118
Oldenburg, DE D-26111
Germany

Sumit K. Lodhia

Australian National University (ANU) - Faculty of Economics & Commerce ( email )

School of Business and Information Management Hanna Neumann Building
Canberra ACT 0200
Australia
+61 02 612 58460 (Phone)
+61 02 612 55005 (Fax)

Kerstin Lopatta (Contact Author)

University of Oldenburg - Accounting and Corporate Governance ( email )

Ammerländer Heerstraße 114-118
Oldenburg, DE D-26111
Germany

Register to save articles to
your library

Register

Paper statistics

Downloads
1
Abstract Views
315
PlumX Metrics