What factors contribute to the rise of corruption in leadership positions?5 answersLeadership inadequacy, driven by self-interest and a lack of focus on enhancing human wellbeing, contributes significantly to the rise of corruption. The abuse of power by leaders, influenced by the number of followers and the discretion they possess, leads to corrupt behavior. Additionally, conflicts arising from personal interests conflicting with organizational goals can provoke corrupt actions in leadership roles within the private sector. In Nigeria, bad leadership and institutional weaknesses have been identified as key factors fueling corruption, with a significant relationship between leadership failure, institutional breakdown, and the surge in corrupt practices. Ultimately, the failure of institutions, often intertwined with leadership failures, plays a crucial role in the proliferation of corruption within leadership positions.
Why do corperations have so much corruption?4 answersCorporations often exhibit high levels of corruption due to various factors. One significant reason is the lack of effective enforcement of anti-bribery laws, allowing improper payments to become ingrained in a company's culture. Additionally, globalization has led to the transfer of corrupt practices by multinational corporations to developing countries, further exacerbating the issue. The conflicts between shareholders and managers in today's capitalist system can also contribute to fraudulent activities within corporations. Moreover, deficiencies in transparency, fairness, and trust within corporate structures globally create an environment conducive to corruption and mismanagement. These combined factors highlight the complex interplay of legal, cultural, and structural elements that foster corruption within corporations.
What causes corruption?5 answersCorruption is caused by various factors. The size and structure of governments, the democracy and political system, the quality of institutions, economic freedom, salaries of civil service, press freedom and judiciary, cultural determinants, percentage of women in the labor force and in parliament, colonial heritage, and the endowment of natural resources are all identified as causes of corruption. Additionally, the political and economic environment, professional ethics and morality, habits, customs, tradition, and demography also contribute to corruption. Past values of corruption and the level of political rights in a country are found to be the most influential factors. Other factors such as the extent of primary schooling, rule of law, foreign direct investment, trade freedom, political rights, government size, and religious fractionalization also play a role in containing corruption. These findings suggest that corruption is not solely driven by cultural attributes and provide feasible avenues for policymakers to address this issue.
Is corruption and corporate governance connected?4 answersCorruption and corporate governance are connected. Research shows that corruption has a negative impact on sustainable development (SD). On the other hand, good corporate governance has a positive and significant influence on SD. In countries with high corruption prevalence, the positive influence of corporate governance on SD is even stronger. In the case of Chinese-listed firms, external governance mechanisms can mitigate the negative impact of corruption-related events on market value. Additionally, external governance is also effective in reducing stock price crash risk in the longer term, especially for corruption-connected firms. The quality of corporate governance practices has been found to reduce the level of corruption globally. Furthermore, the interaction effects of national culture and corporate governance on corruption have been observed, with national culture playing a more significant role. Overall, these findings highlight the importance of corporate governance in addressing corruption and promoting sustainable development.
Does the board structure of a company affect the level of corruption in that company?5 answersThe board structure of a company can have an impact on the level of corruption within that company. Research by Bąk and Cieślik & Goczek suggests that corruption perception and actual bribe payments are related to the time spent dealing with regulations and inspections. Additionally, Martins & Costa find that controlling shareholders with higher control concentration tend to select board members with more directorships and fewer committee positions, possibly to signal a shareholder-friendly board structure that maximizes firm value. Bansal & Singh's study on Indian software companies shows that certain board structure variables, such as board size, board meetings, and remuneration and nomination committees, have a positive impact on financial performance. While these studies provide insights into the relationship between board structure and corruption, further research is needed to fully understand the extent of this relationship.
What are the specific consequences of accounting fraud for employees?3 answersAccounting fraud has specific consequences for employees. Employees at fraud firms experience a significant loss of wages, with about 50% of cumulative annual wages being lost compared to a matched sample. The separation rate is also much higher after periods of fraudulent financial reporting. Fraud firms tend to overbuild and hire new, lower-paid employees as part of the fraud, resulting in positive employment growth during fraud periods. However, when the fraud is revealed, firms shed workers, leading to most of the negative wage consequences. Low-wage employees, who are unlikely to have perpetrated the fraud, experience more severe wage losses. Negative wage effects are larger in thin labor markets and for fraud firms that go bankrupt.