Corruption-Related Disclosure in the Banking Industry: Evidence From GIPSI Countries
36 Pages Posted: 3 Feb 2021 Last revised: 2 Apr 2021
Date Written: December 1, 2020
This paper empirically investigates corruption-related disclosure in the banking industry, aiming to identify the most relevant theories that explain the reasons why financial institutions disclose corruption-related information to the public in their annual financial reports. Using a total sample of 83 banks from the GIPSI countries during the period 2011-2019, our results reveal that, on average, banks that have been involved in corruption issues disclose less on corruption-related information than banks that have not been involved in any corruption scandal. Moreover, banks not involved in corruption cases disclose even more information after other banks’ corruption events become public. These basic relationships, however, are shaped by the characteristics of each particular country in terms of control of corruption and the specific regulation on non-traditional banking activities. Our results are robust to different specifications of the econometric models, and to alternative empirical methods accounting for potential reverse causality and sample selection concerns.
Keywords: Corruption; Disclosure; GIPSI; Institutional quality; Regulation
JEL Classification: G20; G30; K40
Suggested Citation: Suggested Citation