Abstract
Professional expert directors extensively influence corporate corruption disclosure (CCD), while higher political connections may exacerbate corporate management. This study investigates the relationship between the presence of external experts on a board and CCD, as well as the moderating effect of political connections, on the positive role of legal experts in CCD. The study combines agency, resource dependence and stakeholder theories to show how resourceful directors on the board can promote corruption disclosure. Using data on listed firms in the Bangladeshi financial sector, the study analyzes 247 firm-year observations from 2012 to 2016. The results of a multiple regression analysis indicate that accounting experts, legal experts, political connections and corporate media visibility each have a positive and significant influence on CCD. Moreover, the moderating effect of political connections on the relationship between legal experts and CCD is negative and significant due to their higher political influences. The study has significant implications for corporate governance and for policies concerning the development of the economy while reducing corruption.
Highlights
Recent research in developing countries has extensively focused on corporate social responsibility (CSR), corporate environmental responsibility (CER) and corporate carbon (CC) disclosures within the broad range of sustainability management disclosures (SMD) [1,2,3,4,5,6,7]
Our result is supported by the recent studies conducted by Fernández-Gago et al [10] and Shi et al [71], while the findings report that having political connections (POLTC) on the board indirectly and negatively motivate independent directors to promote CSR disclosure
Corruption is an important problem in developing countries and this is true of Bangladesh
Summary
Recent research in developing countries has extensively focused on corporate social responsibility (CSR), corporate environmental responsibility (CER) and corporate carbon (CC) disclosures within the broad range of sustainability management disclosures (SMD) [1,2,3,4,5,6,7]. The existing literature reports that developing countries are highly affected by corruption, because it affects both economic growth and financial stability [20,21,22,23,24,25,26] This raises the question of why researchers covering developing countries have neglected the issue of corporate corruption. Sustainability 2019, 11, 4491 studies on this most critical issue makes us question how external experts (from accounting, law and politics) in the country are promoting corporate corruption disclosure at the business management level. Based on this research question, the study aims to investigate how Bangladeshi firms add expert board members in order to mitigate agency conflict, information asymmetry and the pressures posed by a diverse range of stakeholders. Our reasons for selecting financial-sector firms are: 1) they are the most regulated and visible sector, 2) they have higher economic importance, 3) they have been implicated in recent corruption scandals (capital as well as money markets) and 4) this sector has higher levels of political and government intervention
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