Anti-corruption Disclosure Research Articles

Corporate anticorruption disclosure and earnings management: the moderating role of board gender diversity

Corporate anticorruption disclosure and earnings management: the moderating role of board gender diversity

Legitimacy and anti-corruption disclosures: insights into the early effects of the European Non-Financial Reporting Directive

Purpose This study aims to investigate corporate anti-corruption disclosure (ACD) strategies during the regulative debate surrounding the European Directive 2014/95/EU which for the first time regulated ACD in Europe. By using a legitimacy framework, it assesses whether companies improved proactively their voluntary ACD during the transposition phase to address potential regulatory changes. Moreover, it investigates how organizational and institutional factors influence companies’ reaction. Design/methodology/approach This paper hand-collected ACD data (quantity, scope, quality and transparency) from non-financial reports for the years 2010–2015 for a set of 56 (28 EU and 28 non-EU) companies (336 firm-years observations). The study applies difference-in-difference analysis to assess the effects of the debate. Moreover, it tests the association of ACD with organizational and institutional attributes. Findings The study shows that EU-companies are proactively changing their disclosures. The response is positively influenced by industry exposure to corruption-risks and by lower government corruption, while self-reported negative disclosure impacts negatively. Further, lower government corruption increases the effects of industry exposure to corruption-risks. However, the impacts vary with the disclosure metric. Originality/value Besides reinforcing legitimacy as a driving-force in shaping ACD during the transition phase to a regulated context, the paper integrates traditional legitimacy arguments with insights related to the institutional context. This contributes to improving the understanding of the empirical setting where the production of regulation occurs and can support future regulative processes.

Anti-corruption policy and earnings management: do women in monitoring roles matter?

PurposeThe inadequate enforcement of anti-corruption policies in the private sector in Association of Southeast Asian Nations (ASEAN) countries is the motivation for this study to investigate how a company’s anti-corruption disclosure (ACD) affects earnings management. Moreover, the underrepresentation of women in supervisory roles makes this aspect of particular interest. Hence, this study highlights the question of whether their participation in audit committees can impact the organization's policies.Design/methodology/approachThis research employs archival methods to examine 30 of the largest non-financial companies from each of the ASEAN-5 countries (Indonesia, Malaysia, Singapore, Thailand and the Philippines) from 2016 to 2018. Lastly, the authors also utilize a robustness test.FindingsAs expected, the results indicate that the low willingness to disclose anti-corruption activities encourages earnings management practices. This relationship is significantly more potent in firms with fewer women on their audit committees. The findings remain robust after assessing alternative measurements.Practical implicationsThe findings of this study imply that a company’s anti-corruption policies and the role of women in supervisory activity influence rent-seeking behavior. Thus, investors should consider elements that promote transparency in companies. Additionally, regulators must evaluate regulations to promote gender diversity and eradicate corruption by establishing exact policies, providing whistleblowing protection and simplifying indicators for effective disclosure.Originality/valueThe consequences of the anti-corruption policy in the ASEAN-5 countries are relatively under-researched and still focus on a single country. Furthermore, while examining the connection between ACD and earnings management, this study also considered how addressing the supervisory factor is urgent in terms of corporate transparency.

FACTORS INFLUENCING ANTI-CORRUPTION DISCLOSURE IN INDONESIA

This study aims to determine the factors that influence anti-corruption disclosure by examining the effect of independence of the board of commissioners, government ownership, company size, and media exposure partially on anti-corruption disclosure. The sampling method used was purposive sampling, with a total sample of 38 companies participating in the Asia Sustainability Reporting Rating for the 2018–2020 period that are listed on the Indonesia Stock Exchange. The data used in this study is secondary data, which are available in the annual reports and sustainability reports of the study’s sample. Data collection in this study is done using documentation techniques. This study uses Smart PLS (Partial Least Square) to test the hypothesis. The analytical methods used in this study include the outer loadings test, R Square, and path coefficient significance. The results show that media exposure has a significant positive effect on anti-corruption disclosure, while independence of the board of commissioners, government ownership, and company size have no effect on anti-corruption disclosure.

Anti-corruption reporting: a review empirical literature

Purpose This review summarizes the empirical literature dealing with anti-corruption disclosure as this specific type of disclosure has attracted a great deal of attention in accounting literature. Design/methodology/approach Keywords used to collect relevant papers from numerous electronic databases (e.g. Science Direct, Emerald, Wiley-Blackwell, Springer and Taylor and Francis) include “anti-corruption reporting” “anti-corruption disclosure”. The final sample encompasses a set of 35 empirical studies published between 2015 and the beginning of 2024. Findings The summary of reviewed studies suggests that anti-corruption empirical studies are mainly cross-country investigations. Two streams of research are identified: (i) the determinants of anti-corruption disclosure and (ii) the economic consequences of anti-corruption reporting. With respect to the first stream of research, six main categories of determinants are identified (corporate characteristics, corporate governance attributes, informal institutions, stakeholders’ pressures, country institutional effect and regulation effect). With respect to the second stream of research, findings show that anti-corruption reporting is negatively associated with profitability, reduces earnings management and enhances corporate social reputation. Practical implications With respect to regulators, this review sheds light on the importance of anti-corruption disclosure in the fight against corruption. It also suggests that the adoption of some regulations like the Directive 2014/95/EU in the European Union or the 2010 UK Bribery Act have contributed to more transparency. With respect to investors, the existence of some determinants of anti-corruption reporting (e.g. United Nations Global Compact membership, cross-listing, multinationality, board independence) may signal the adequacy of corporate reporting policy and that management is following an adequate strategy to fight corruption and enhance transparency. Originality/value This review offers future research avenues for accounting scholars with respect anti-corruption disclosure literature.

Anti-corruption disclosure: evidence from the natural experiment of the Non-Financial Reporting Directive

Drawing upon institutional theory, we investigate how companies react to coercive pressures which impose anti-corruption disclosure practices. We adopt the concept of change in the institutionalized field and investigate the impact of the natural experiment of the Non-Financial Reporting Directive (NFRD) implementation on a company’s choice for disclosing its anti-corruption policy. We examine the relationship between firm linkages with the external environment, proxied by board independence and ownership dispersion, and anti-corruption disclosure. We use a sample of 72 companies listed on the Warsaw Stock Exchange over the period of 2015–2019 that were subject to the NFRD legislation. The evidence from the Tobit model shows that the linkages with the external environment differentiate company reactions to the implementation of the mandatory reporting legislation. In particular, greater company linkages via interdependent directors and ownership dispersion increase the scope of the anti-corruption disclosure in the post-NFRD period. Our study offers policy implications suggesting that corporate scrutiny and exposure to external constituencies may improve implementation of legislation into company practice and enhance anti-corruption disclosure.

A longitudinal examination of anti-corruption disclosure in the banking sector of a least-developed economy: does board composition make a difference?

PurposeThis study focuses on anti-corruption disclosure (ACD) as a critical indicator of a bank’s commitment to combat corruption. It seeks to measure the level of ACD in banking companies. Emphasizing the pivotal role of board directors in ensuring corporate accountability and transparency, the study further explores the connection between board composition and ACD.Design/methodology/approachThis study adopts automated content analysis (using keyword search) to measure the level of ACD in the annual reports of listed banks in Bangladesh. Drawing upon agency theory and resource-dependence theory, the study proposes that the collective monitoring and resources facilitated by a well-structured board (size, gender diversity and independence) significantly influence a bank’s commitment to combat corruption. The paper employs linear regression to examine the hypotheses. The reliability of the findings is further validated through the application of the Generalized Method of Moments (GMM) and Quantile Regression.FindingsThe results indicate a steady rise in ACD over the sample period (2014–2022). The analysis establishes that larger board sizes and a greater presence of female directors are positively associated with ACD. Notably, the study identifies a critical mass of at least three female directors for a significant positive relationship between gender diversity on the board and ACD. However, no significant relationship is observed between board independence and ACD.Practical implicationsThe study sheds light on the current state of ACD within the banking companies of a least-developed country. The findings carry significant implications for regulators to gauge banks' dedication to anti-corruption efforts and make informed decisions on issuing guidance for enhanced ACD. These findings can also assist regulators in assessing the implications of board composition and formulating guidelines within the corporate governance code.Originality/valueThis study contributes to the literature on ACD in the context of a least-developed economy. Notably, the study fills a research gap by exploring ACD in the banking industry. A key aspect of this study is its exploration of the determinants of ACD, explicitly emphasizing how board composition is likely to influence ACD.

The determinants of corporate anti-corruption disclosures: evidence from construction companies in the Asia-Pacific

PurposeThis study aims to investigate the determinants of anti-corruption disclosures by construction firms in Asia-Pacific countries.Design/methodology/approachThe sample comprises construction companies from seven Asia-Pacific countries from 2015 to 2019. The authors hand-collected data on anti-corruption disclosures by using content analysis.FindingsThis study provides empirical evidence that government ownership, country-level accounting competence and high-quality auditors increase companies’ anti-corruption disclosures. Meanwhile, this study finds that uncertainty avoidance does not affect companies’ anti-corruption disclosures.Practical implicationsThis study has a number of implications. First, government and professional accountant organizations need to improve accountants’ knowledge and competence through education, training and continuous professional development. Second, public accounting firms need to ensure the quality of their auditors, particularly in the technical competence in financial and nonfinancial reporting. Finally, universities must improve and update their curriculum regarding nonfinancial reporting issues.Originality/valueThis study is among the first to examine anti-corruption disclosure practices in the most corrupted settings, i.e. the construction industry in Asia-Pacific countries. It uses the isomorphism perspective to explain the influence of government ownership, country-level accounting competence and high-quality auditors on anti-corruption disclosure transparency. The number of prior studies investigating this association is very limited. Moreover, disclosures of anti-corruption information are complex and sensitive; thus, coercive, normative and mimetic pressures are required to achieve higher transparency and sustainability.

ІНСТИТУЦІЙНІ ПРІОРИТЕТИ АНТИКОРУПЦІЙНОЇ ПОЛІТИКИ УКРАЇНИ

It is noted that the topic of corruption is relevant due to the emergence of new areas for committing corruption crimes, new institutional mechanisms for responding to corruption, and new requirements of Ukraine’s partner states. The war with Russia, Ukraine’s accelerated course towards European integration, and high-profile anti-corruption disclosures are the factors that increase scientific interest in the topic of corruption and mechanisms for preventing and combating it. The purpose of the study is to identify the institutional priorities of Ukraine’s anticorruption policy. The objectives of the study are as follows: 1) to find out how the Ukrainian government responds to the requirements of international institutions to implement reforms in the field of preventing and combating corruption; 2) to determine how the war with Russia and the acceleration of European integration processes in Ukraine have affected the problem of corruption and the modification of the national model of preventing and combating it; 3) to identify which institutional obstacles intensify/slow down anti-corruption processes in Ukraine. The features of Ukraine’s anti-corruption policy at the present stage are studied. The main results and problems in implementing the recommendations of international anticorruption institutions are analysed. The problem of preventing and combating corruption is considered through the prism of the war and the prospects for postwar reconstruction, as well as Ukraine’s European integration course. It is stated that the Russian aggression has caused new corruption challenges, the number of which is growing in wartime, mobilisation of persons liable for military service, restoration of the de-occupied territories, etc. Priority areas for further institutional reforms in the field of preventing and combating various types of corruption are identified. It is argued that the success of the anti-corruption reform in Ukraine depends on the political will of the authorities, consolidation of efforts of the state institutions and civil society. It is noted that the current changes in the institutional design of the national system of preventing and combating corruption are not yet complete and need to be deepened to meet the needs of wartime and ensure largescale post-war reconstruction of Ukraine.

Anti-corruption disclosure and corporate governance mechanisms: insights from FTSE 100

PurposeThis study aims to examine the impact of corporate governance (CG) on anti-corruption disclosure (A-CD), paying particular attention to the FTSE 100. Notably, it examines how board and audit committees’ characteristics affect the quantity and quality of anti-corruption disclosure.Design/methodology/approachData from FTSE 100 firms, spanning the period from 2014 to 2020, were analysed using the regression of the Poisson fixed effect and GEE analyses.FindingsThe findings show that gender diversity, audit committee expertise and the independence of the audit committee are positively associated with both quantity and quality of anti-corruption disclosure. Notably, no statistically significant relationships were identified between anti-corruption disclosure and factors such as board size, role duality or board meetings.Research limitations/implicationsThe findings provide valuable insights for decision-makers and regulatory bodies, shedding light on the elements that compel UK companies to enhance their anti-corruption disclosure and governance protocols to alleviate corruption and propel efforts towards ethical behaviour.Originality/valueThis study makes a notable contribution to the sparse body of evidence by examining the influence of board and audit committee attributes on anti-corruption disclosure subsequent to the implementation of the UK Bribery Act in 2010. Specifically, to the best of the authors’ knowledge, this study assesses for the first time the impact of board and audit committee mechanisms on both the quantity and quality of anti-corruption disclosure.

Anti-corruption corporate disclosures and earnings management: evidence from a developed market

Purpose This study aims to examine the association between anti-corruption corporate disclosure and earnings management practices by bringing evidence from a developed market. Design/methodology/approach The study uses data from non-financial FTSE 100 Shares in 2016 and 2017. This study develops a disclosure index to capture the anti-corruption disclosures and run pooled, fixed effects and generalized methods of moments regression models to explore the anti-corruption disclosure–earnings management association. This study also disentangles discretionary accruals into positive and negative, use adjusted discretionary accrual computation and take a more conservative view on discretionary accruals computation as an additional analysis. Findings The results show a negative and significant association between anti-corruption disclosure and earnings management practices. When disentangling discretionary accruals (overvalued/positive and undervalued/negative), the authors found that higher anti-corruption disclosures were negatively associated with positive discretionary accruals, but not associated with negative discretionary accruals. The additional analysis confirmed the previous results, showing that anti-corruption disclosures are perceived as a substantive practice, rather than a mere disclosure practice for legitimacy reasons. Originality/value This study contributes to debate on the symbolic versus the substantive uses of anti-corruption disclosures in the UK context.

PENTINGKAH KARAKTERISTIK PERUSAHAAN DAN TIPE INDUSTRI PADA PENGUNGKAPAN ANTI KORUPSI?

This study aims to determine the influence of company size, industry type, and international operation on anti-corruption disclosures in non-financial companies listed on the Indonesia Stock Exchange for the 2019-2020 period. The purposive sampling method is used to determine the sample in this study. This study has 170 observations with 85 companies. The content analysis method extracts the anti-corruption information in the sustainability report and annual reports. This study uses 12 checklist items from GRI 205 to measure the extent of anti-corruption disclosure. The analytical method used in this study is multiple linear regression. The results of this study indicate that company size and industry type have a positive and significant effect on anti-corruption disclosures. Meanwhile, international operations do not affect anti-corruption disclosures.

PENGARUH KARAKTERISTIK PERUSAHAAN DAN DEWAN KOMISARIS TERHADAP PENGUNGKAPAN ANTI KORUPSI PERUSAHAAN MANUFAKTUR YANG TERDAFTAR DI BURSA EFEK INDONESIA

The anti-corruption program is the company's initial defense strategy against corruption. Therefore, the disclosure and transparency of these programs is a commitment in illuminating corruption and improving the ethical behavior of management, employees, partners, agents and other related parties of the company. This study aims to analyze the effect of company characteristics and the board of commissioners on corporate anti-corruption disclosures. The research objects are manufacturing sector companies listed on the IDX in 2020 and 2021. The sampling method is purposive sampling with a sample of 100 companies. Data collection uses research instruments, data analysis is quantitative/statistical in nature with the aim of testing the established hypotheses. Methods of data analysis using SPSS version 25.0. This study found that company size, company age, net profit margin, and board of commissioners have a positive effect on anti-corruption disclosure.
 Keywords: Anti-corruption Disclosure, Company Characteristics, Board of Commissioners, Manufacturing Companies

The appearance of anti-corruption reporting in a developed market: UK evidence

Purpose This study aims to examine anti-corruption disclosure (ACD) following government legislation, specifically the UK Bribery Act, 2010, through focusing on the UK extractive industry. Design/methodology/approach This study uses content analysis for data analysis with an ACD checklist developed to capture ACD in annual reports during the period 2003–2019. Findings The study found an increase in ACD following 2010, with companies answering ACD questions and addressing categories that they previously ignored. Originality/value Most of the previous studies have examined voluntary ACD; this study contributes to the literature by applying an index developed from government regulation to investigate the difference that regulation can make to disclosure. Hence, this study provides evidence of how, from an institutional perspective, legislation plays an important role in facilitating and endorsing anti-corruption reporting.

Anti-corruption disclosure quality and earnings management in the United Kingdom: the role of audit quality

PurposeBuilding upon institutional pressures on firms to deal with corruption, this study aims to investigate the association between a firm's engagement with anti-corruption disclosure quality (ACD_Q) and earnings management (EM). Also, this study examines the moderating role of audit quality in the association between ACD_Q and EM.Design/methodology/approachThe authors constructed an ACD_Q index based on the 2010 UK Bribery Act and taking into account a wide range of rules on corruption and bribery, including those of the OECD, World Bank, UNCTAD, UNGC, UNCAC and GRI. Generalized method of moments and panel regression were used to examine the association between ACD_Q and EM.FindingsUsing a sample of 2,695 firm‐year observations of the UK’s FTSE-350 from 2008 to 2018, this study finds ACD_Q is negatively associated with EM. In addition, this negative relationship is contingent on audit committee independence and audit committee expertise. This finding is supported by additional robustness and sensitivity analysis.Practical implicationsThe empirical evidence reiterates the crucial need for more concerted efforts to ensure corporate engagement in anti-corruption practices with a view to reducing earnings manipulations.Originality/valueThis study contributes to the limited evidence that investigates how ACD Q influences EM in the UK after the introduction of the UK Bribery Act in 2010. Furthermore, by considering the period from 2008 to 2019, this study investigates the potential moderating role of UK corporate governance reforms in EM reduction. In particular, to the best of the authors’ knowledge, this study assesses for the first time the moderating effect of audit committee mechanisms on the ACD Q and EM nexus.

Family control and corporate anti corruption disclosures: the moderating effect of female directors

PurposeThis paper aims to examine the effect of family control on corporate anticorruption disclosures of UK publicly listed firms and whether female board directors moderate the latter relationship.Design/methodology/approachThis paper uses Poisson regression analysis for a sample of 1,546 FTSE 350 firm-year observations. Weighted least squares and propensity score matching are then used to assess the robustness of the findings.FindingsThe results show that family ownership and involvement are negatively associated with anticorruption disclosures. The tests of moderation indicate that female directors decrease the negative effect of family control on anticorruption disclosures.Originality/valueTo the best of the researcher’s knowledge, this paper is the first to investigate the impact of family control on anticorruption disclosures while taking into consideration the moderating effect of female directors.

Assessing the Anti-Corruption Disclosure Practices in the UK FTSE 100 Extractive Firms

This paper considers the anti-corruption disclosure reporting of the large UK-quoted extractive companies from 2003 to 2019. This period includes the introduction of the 2010 UK Bribery Act, which might be expected to influence corporate disclosure. It takes content analysis metrics from the environmental reporting literature, which is a more developed area of research, and considers an area with a higher volume of corporate disclosures. It applies these metrics to investigate the trends in corruption reporting over time and the impact of the introduction of the Act on reporting breadth and depth. We find that some of the metrics would appear to add more insight than others in this new context. We conclude that the volume of reporting has grown over time, but this would seem to be in breadth, more questions addressed rather than more depth to the answers given. There has been a step-change in reporting since the introduction of the Act, though concluding whether this has increased quality may depend on your perspective and interest as a user of the information.

Corporate governance and anti-corruption disclosure

PurposeIn recent years, the role of environmental, social and governance (ESG) disclosure has become crucial. The aim of this paper is to study how corporate governance affects one part of ESG disclosure: anti-corruption disclosure.Design/methodology/approachThis study examined 140 corporate social responsibility (CSR) reports from companies listed on the Italian stock markets and 50 CSR reports from other companies, then this study analysed the adoption of the Global Reporting Initiative (GRI) standard no. 205.FindingsThe results show a low level of disclosure, and that corporate governance issues matter. In particular, the analysis found a positive relationship between the presence of female and outside members, the number of board members and the level of anti-corruption disclosure.Research limitations/implicationsThis study acknowledges some limitations. Firstly, the research is based on a one-year sample. Secondly, the research hypotheses are confirmed only when considered in relation to a single section of the GRI standards. Thirdly, this study has a bias towards relatively large enterprises.Practical implicationsIt could be worthwhile introducing a soft regulation regarding the composition of the board of directors that requires a certain quantitative and qualitative composition.Originality/valueTo the best of the authors’ knowledge, this is one of the few studies, the first in Italy, that sheds light on anti-corruption disclosure and its determinants.

Anti-Corruption Disclosure Prediction Using Deep Learning

Corruption gives major problem to many countries. It gives negative impact to a nation economy. People also realized that corruption comes from two sides, demand from the authority and supply from corporate. On that regard, corporates may have their part in fight against corruption in the form of anti- corruption disclosure (ACD). This study proposes new method of ACD prediction in corporate using deep learning. The data in this study are taken from every companies listed in Indonesia Stock Exchange (IDX) from the year 2017 to 2019. The companies can be categorized in 9 categories and the data set has 8 features. The overall data has 1826 items in which 1032 items are ACD and the other 794 items are non-ACD. In this study, the deep neural network or deep learning is composed from input layer, output layer and 3 hidden layers. The deep neural network uses Adam optimizer with learning rate 0.0010, batch size 16 and epochs 500. The drop out is set to 0.05. The accuracy result from deep learning in predicting ACD is considered good with the average training accuracy is 74.76% and average testing accuracy is 76.37%. However, the loss result isn’t good with average training loss and testing loss are respectively 51.76% and 50.96%. Since the aim of the study to find the possibility of deep learning as alternative of logistic regression in ACD prediction, accuracy comparison from deep learning and logistic regression is held. Deep learning has average prediction accuracy of 76.37% is better than logistic regression with average accuracy of 67.15%. Deep learning also has higher minimum accuracy and maximum accuracy compared to logistic regression. This study concludes that deep learning may give alternatives in ACD prediction compared the more common method of logistic regression.

Anti-corruption and disclosure ownership structure of company value using risk as an intervening variable

This research was conducted to determine the effect of anti-corruption disclosure on company value through risk as an intervening variable. Employing secondary data obtained from annual financial report data, Corporate Social Responsibility reports, and sustainability reports of mining companies listed on the Indonesian stock exchange, this research produced 56 samples during 2019, with a total of 73 populations using a purposive sampling technique. Companies in Indonesia have an average high company value, so the public's view of the company's welfare is also high. However, there are several companies whose share prices could be more stable. The analysis technique in this study uses Smart PLS. Descriptive analysis and statistics reveal that anti-corruption disclosure and ownership structure have no significant effect on the risk and value of the company. However, trouble has a substantial impact on company value. This research provides several suggestions to increase company value. Companies should publish complete financial reports accompanied by CSR reports and sustainability reports, make anti-corruption commitments, pay attention to risk, and manage the ownership structure by using domestic ownership at a certain level. For investors, it is better to diversify your investment by investing in an optimal portfolio of several profitable stocks.