Corporate Governance and Corruption: A Cross‐Country Analysis

Abstract

Because the empirical literature on the causes of corruption has focused primarily on the demand side of corruption, that is, the corrupt officials who receive bribe payments, the role of the private sector as the supply side of corruption has not been examined thoroughly in this literature. In this article, it is argued that corporate governance is among the important factors determining the level of corruption. Using a cross‐country data set, hypotheses that explicitly link various measures of corporate governance to the level of corruption are tested. The results show that corporate governance standards can have profound impacts on the effectiveness of the global anticorruption campaign.