Drawing upon rational choice and investor attention theories, we examine how accusations of corporate bribery and subsequent investigations shape market reactions. Using event study methodology to measure loss in firm value for public firms facing bribery investigations from 1978 to 2010, we found that total market penalties amounted to $60.61 billion. We ran moderated multiple regression analysis to examine further the degree to which the unique characteristics of bribery explain variations in market penalties. Companies committing bribery in less corrupt host (...) countries and with the involvement of compromised executives experienced greater market penalties than did other companies. After partitioning share value losses into components for regulatory penalties, class action settlements, and loss to reputation, we found that reputational penalties account for 81.8¢ of every dollar of share value loss. Omission of reputational penalties in rational choice calculus underestimates bribery costs by 4.5 times. The results suggest that firms should not underestimate the importance of market-imposed reputational penalties by merely considering regulator-imposed fines and sanctions. (shrink)

Corporate social responsibility (CSR) is a relatively undeveloped concept despite its increasing importance to corporations. One difficulty is the possible inexactness of CSR. Another is the apparent reluctance by regulatory authorities and policy makers to intervene in the area. This is largely a result of inhibitions created by traditional approaches to company law with emphasis on shareholder protection and financial disclosure. The consequence is the stultification of independent development of CSR by tying social issues to financial performance. This attitude might (...) not be unconnected to the theoretical and practical challenges in justifying CSR and defining its scope. The underlying impediment is a factual and theoretical failure to distinguish ‘instrumental’ and ‘pure’ (ethical) CSR. This article demonstrates that ethical CSR highlights the role of regulation, and a principal stance is that regulation is neither incompatible nor irreconcilable with ethical CSR. The article argues that cognizance of the intrinsic moral justification of ‘pure’ CSR is required for delineating the scope of CSR as well as for clarifying the desirability and extent of its regulation. It argues that the dynamic history and visage of multinational corporate corruption illuminates the fluidity of the regulation–CSR relationship. The current and widening backlash against transnational corporate corruption is, arguably, a demonstration of the position that regulation and CSR are not mutually exclusive and absolute concepts. This article submits that recognition and application of this ‘ethical’ and ‘instrumental’ CSR distinction is fundamental to the development of CSR and resolution of connected questions of regulation. (shrink)

This paper seeks to determine the extent of anti-corruption information disclosure in the sustainability reports originating from Gulf countries. Focus primarily on the fight against corruption, this study utilizes a deeply-rooted content analysis technique of corporate sustainability reporting, covering 66 Gulf Cooperation Council (GCC) firms during 2014. Strengthened by the application of institutional theory, insight into the results points to a state of limited maturity regarding the disclosure of anti-corruption procedures in the region. More specifically, the results highlight the compliance (...) in the reporting of conduct code, while reporting information on whistle-blowing was significantly less in comparison. Firms in Qatar and UAE ultimately release better informed reports; inclusive of detailed information on internal anti-corruption practices. (shrink)

This article presents the results of the longitudinal study of Addiopizzo, a successful anti-bribery organization founded in Sicily in 2004. It analyzes how this organization has used information disclosure as a strategy to fight adverse environmental conditions and the immoral activities of the Sicilian Mafia. This article extends the business ethics and corporate social responsibility literature by showing how multi-level strategic information disclosure processes can help gain organizational legitimacy in adverse social environments and successfully fight against social resistance to change, (...) low levels of moral imagination and attacks from criminal organizations. This article provides an additional contribution to the literature by linking the three research streams on corporate transparency, the fight against corruption, and organizational legitimacy. The results of this research also contribute to the special issue of the EBEN AC 2010, “Which values for which organizations”, since it provides a unique example of an organization capable of spreading the values of social justice and honesty in a difficult social environment plagued by Mafia. (shrink)

Corruption presents an assurance problem to businesses: all businesses are best off if none act corruptly but in the event that corruption occurs are better off if they act corruptly than if they do not, and because there is no assurance that other actors are not cheating a business does not know how to act. The usual solution to an assurance problem – criminal sanctions imposed on cheaters – does not work in a corrupt system. Integrative Social Contract Theory suggests (...) a solution to the assurance problem. Application of Integrative Social Contract Theory to corruption demonstrates that in the case of corruption it has advantages over international law, and that the theory's elegance lies in its recognition of norms generated by multiple communities. (shrink)

In the current study, we examine the changes in disclosure practices on compliance and the fight against corruption at Siemens AG, a large German multinational corporation, over the period 2000–2011 during which a major corruption scandal was revealed. More specifically, we conduct a content analysis of the company’s annual reports and sustainability reports during that period to investigate the changes of Siemens’ corruption and compliance disclosure using both quantitative and qualitative methods. Through the lens of legitimacy theory, stakeholder analysis, and (...) organizational façades, we find evidence that Siemens changed its compliance and corruption disclosure practices to repair its legitimacy in the wake of the 2006 corruption scandal. We analyze these strategies more closely by using the rational, progressive, and reputation façades framework. Our primary findings suggest that the annual reports show peaks of disclosure amounts on corruption and compliance disclosures earlier than sustainability reports, which can be partly explained by analyzing the disclosures made about—and to—the different stakeholder groups. We find that the annual report focuses more on internal stakeholders such as employees, while the sustainability report focuses more on external stakeholders such as suppliers. We also find that the company uses the façades differently depending on which report is being analyzed. (shrink)

Our paper draws attention to a neglected channel of corruption—the bribe payments by state-owned enterprises. This is an important phenomenon as bribe payments by SOEs fruitlessly waste national resources, compromising public welfare and national prosperity. Using a large dataset of 30,249 firms from 50 countries, we show that, in general, SOEs are less likely to pay bribes for achieving organizational objectives owing to their political connectivity. However, in deteriorated institutional environments, SOEs may be subjected to potential managerial rent-seeking behaviors, which (...) disproportionately increase SOE bribe propensity relative to privately owned enterprises. Specifically, our findings highlight the importance of fostering democracy and rule of law, reducing prevalence of corruption and shortening power distance in reducing the incidence of SOE bribery. (shrink)

Deferred prosecution agreements (DPAs) are legal means, alternative to trial, for the resolution of criminal business cases. Although DPAs are increasingly used in the US and are spreading to other jurisdictions, the ethics of DPAs has hardly been subjected to critical scrutiny. We use a multidisciplinary approach straddling the line between philosophy and law to examine the ethics of DPAs used to resolve cases of multinational enterprises’ (MNEs) foreign corruption. Deontologically, we argue that the normativity of DPAs raises critical concerns (...) related to the notion of justice as punishment, with serious cases of international corruption resolved with minimal retribution for offending MNEs. Taking a utilitarian ethical perspective, we also evaluate the effect of DPAs on MNEs’ tendency to self-regulate or re-offend. Our conclusion, supported by critical analysis of the juridical literature and case evidence on MNEs’ recidivism, is that DPAs do not foster ethical behavior. (shrink)

This paper aims to investigate the extent of anti-corruption reporting by ASEAN companies and examine whether coercive factors influence the level of disclosure. The authors adopt indicators from the Global Reporting Initiative version 4.0 to measure the extent of anti-corruption disclosures in 117 companies’ reports. Informed by a coercive isomorphism tenet drawn from the institutional theory, the authors propose that several institutional factors influence the extent of their voluntary disclosures. The findings reveal that a large degree of variability difference between (...) the average levels of anti-corruption disclosure in Thailand and the Philippines. The dependence on government tenders and foreign ownership are associated with the level of disclosure. Surprisingly, the United Nation Global Compact membership is not a significant determinant of anti-corruption reporting. This signifies that the membership in the international initiative does not correspond to individual company’s commitment to disclose anti-corruption information. In spite of significant efforts undertaken by global organizations to combat corruption, the level of anti-corruption disclosure is significantly different among the four countries under study. The disclosure of sensitive information such as the confirmed incidences of corruption cases requires careful consideration by the top management as it is subjected to legal implications and reputational risks. Thus, impression management can complement the coercive pressure in explaining the level of anti-corruption reporting. This study is among the first studies which explores the association between coercive factors and the level of anti-corruption disclosure in ASEAN region. (shrink)

Anticorruption regulators delegate to organizations part of the responsibility for deterring corruption in the form of ethics and compliance programs (ECPs), also referred to as compliance programs, ethics programs, and integrity programs. From this anticorruption perspective, organizations are expected to design and implement programs that comply with general criteria established by regulators to achieve a specific social goal—reducing corruption. This integrative review examines how different communities of practice analyze ECPs in their role as anticorruption mechanisms. Based on a conceptualization of (...) ECP derived from theories of regulation, the review integrates the fragmented literature at the intersection of ECPs and corruption and uncovers connections across communities of practice to propose new insights and research directions. To achieve this objective, the review proposes a process-oriented anticorruption multi-level integrative framework that (1) situates ECPs in the anticorruption process that originated them and (2) identifies the areas where cross-fertilization of ideas from different communities of practice can contribute to redirecting future research. The review concludes with a research agenda that can help advance knowledge applicable to ECPs as anticorruption mechanisms and to other self-regulatory initiatives against grand societal challenges. (shrink)

Addressing organizational wrongdoing (OW) is crucial for sustainable development. However, there seems to be a lack of structured analysis of this concept within the realm of the UN Sustainable Development Goals (UN SDGs). This study aims to map the economic, business, and management literature on OW in relation to the SDGs using metadata extracted from 374 journal articles indexed in the Web of Science database for the period 2000–2023. This study highlights the need for a more systematic approach to understanding (...) complex OW phenomena in the sustainable context. It proposes the foundation for a novel conceptual framework and suggests future research directions. Additionally, this study emphasizes the importance of interdisciplinary research for developing comprehensive strategies that align organizational practices with sustainable development objectives. (shrink)