Business Corruption and Economic Prosperity

33 Pages Posted: 18 Jul 2017 Last revised: 27 Aug 2017

See all articles by Eli Amir

Eli Amir

Tel Aviv University

Shai Danziger

Coller School of Management

Shai Levi

Tel Aviv University

Date Written: August 26, 2017

Abstract

Prior literature shows government corruption mostly hurts poorer economies, whereas recent events, including the 2008 US economic crisis, suggest business corruption may harm growth in wealthier economies. Using multi-national surveys in which citizens communicated their perceptions of corruption levels for both the private and the public sectors, we examine the extent of business corruption relative to government corruption in countries, and its relation to economic prosperity. We find that citizens of wealthier countries report higher business corruption than citizens of poor countries, and relatively lower government corruption. Business corruption is evidently a greater concern to citizens of wealthier countries. Furthermore, we find that an increase in perceived business corruption is associated with a decrease in income per capita mainly in wealthy countries. In wealthier economies, business trust has a larger role, and perceived business corruption has a stronger effect on growth. Finally, our evidence suggests an increase in perceived business corruption leads to increase in regulation, and the marginal effect of the regulation on growth is positive.

Keywords: Business corruption, economic prosperity, corruption perceptions, regulation

Suggested Citation

Amir, Eli and Danziger, Shai and Levi, Shai, Business Corruption and Economic Prosperity (August 26, 2017). Journal of Accounting, Auditing and Finance, Forthcoming. Available at SSRN: https://ssrn.com/abstract=3002227 or http://dx.doi.org/10.2139/ssrn.3002227

Eli Amir

Tel Aviv University ( email )

312 Recanati Bldg.
69978 Tel Aviv
Israel
+972 3 640-8510 (Phone)
+972 3 640-7738 (Fax)

Shai Danziger

Coller School of Management ( email )

Tel Aviv
Israel

HOME PAGE: http://https://en-coller.tau.ac.il/profile/shaid

Shai Levi (Contact Author)

Tel Aviv University ( email )

Tel Aviv, 69978
Israel

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