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Corruption, Corporate Social Responsibility and Financial Constraints: International Firm‐level Evidence
Author(s) -
Lopatta Kerstin,
Jaeschke Reemda,
Tchikov Magdalena,
Lodhia Sumit
Publication year - 2016
Publication title -
european management review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.784
H-Index - 32
eISSN - 1740-4762
pISSN - 1740-4754
DOI - 10.1111/emre.12098
Subject(s) - language change , corporate social responsibility , business , vulnerability (computing) , accounting , empirical evidence , corporate governance , finance , public relations , political science , literature , art , philosophy , computer security , epistemology , computer science
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.