Level Of Corruption In Countries Research Articles

Political Corruption and Its Impact on the Rule of Law: A Comparative Analysis of Countries with Islamic Laws

The article "Political Corruption and Its Impact on the Rule of Law: A Comparative Analysis of Countries with Islamic Law" examines the relationship and impact of political corruption on the rule of law in countries with Islamic law. The primary objective of this article is to investigate the role and influence of political corruption in establishing the rule of law in these countries.
 The research methodology employed in this study is content analysis, which examines the impact of political corruption on the rule of law in countries with Islamic law through the study of legal texts and political documents. In this research, the level of political corruption in countries is considered as an independent variable using secondary data from Transparency International and Universidad Passau, and its impact on the rule of law is examined through qualitative research methods by studying case studies and analyzing legal and political relationships concurrently.
 The research findings indicate that political corruption leads to a violation of the rule of law in countries with Islamic law. Moreover, this article demonstrates that political corruption has a significant influence on the rule of law and the effectiveness of the legal system in these countries. Therefore, reducing and controlling political corruption in these countries is crucial for improving the rule of law and strengthening the legal system.

Condoning corruption: Who votes for corrupt political parties?

The election of corrupt politicians remains a crucial global problem, yet our knowledge regarding factors determining electorates' tolerance for corruption remains extremely limited. This paper explores individual characteristics and macroeconomic factors determining an individual's likelihood to (1) vote for her preferred political party even if that party was involved in a corruption scandal, and (2) abstain from voting even when an established non-corrupt party exists. I identify several individual characteristics, such as education and income levels, gender, employment status, political leaning, and trust in local media, and macroeconomic factors, such as income per capita, country-level corruption, and political rights, significantly influencing an individual's voting choice. A few implications emerge. Corruption can be self-sustaining and may undermine democracy by discouraging political participation. While education promotes political participation, it does not reduce citizens' tolerance for corruption by their preferred political parties. Corruption might widen income and gender inequality by lowering the political participation of the poor and women, and extreme political leaning can promote political corruption.

Corruption, lending and bank performance

This paper uses a sample of 7235 banks from 160 countries between 2000 and 2016 to investigate the link between corruption, lending and bank performance. It considers both country- and bank-level corruption. The study finds that while corruption increases bank lending, it has an adverse impact on bank profits and risks (credit, solvency and distance to default). Corporate lending is found to be most influenced by corruption. Bank-level corruption influences bank performance in both developed and developing countries whereas country-level corruption has a lesser effect on lending in developing countries. The study also finds that greater bank competition, market concentration and improved regulatory environments reduce the effect of corruption on bank lending and performance. Policy makers should focus on enhancing regulatory rules and institutions in order to deal with the adverse impact of corruption on bank performance.

Modeling the impact of macroeconomic indicators on the Corruption Perceptions Index: Example of Ukraine, Bulgaria, and Georgia

AbstractThis article is devoted to the analysis of corruption problems in Central and Eastern European countries. As it is difficult to measure the volume of corruption, this article makes use of the Corruption Perceptions Index (CPI) from Transparency International as the main indicator of corruption levels in countries. Three countries – Ukraine, Bulgaria, and Georgia – are taken as examples, and by using macroeconomic modeling, which macroeconomic factors determine the rank of the state in the Corruption Perceptions Index on the basis of data analysis from 1998 to 2019 was researched. The Corruption Perceptions Index is taken as the dependent variable, and a plurality of factor characteristics includes general macroeconomic variables such as consumption, healthcare, taxes, foreign investment, and so on. The results of the calculations determine which macro indicators should be given attention to not only to reduce the level of corruption in the public sector, but also to increase the country’s position in the CPI. In addition, a system for preventing and fighting corruption is proposed, indicating anti‐corruption measures, expected results, and identifying certain components of this system’s functioning quality.

CEO Overconfidence, Loan-Loss Provisions, and the Effect of Country Corruption: An International Investigation

ABSTRACT This study examines the relationship between CEO overconfidence and bank recognition of loan-loss provisions (LLPs) and the effect of country corruption level on this relationship by analyzing cross-country data. We use a sample of 3,047 financial institutions in 53 different countries over 2013–2018. The results reveal that overconfident CEOs are more likely to recognize lower LLPs, suggesting that they overestimate (underestimate) favorable (unfavorable) outcomes of loan collection. Furthermore, we find that lower country-level corruption attenuates this relationship. We further show that overconfident CEOs reduce only the recognition of discretionary components of LLPs.

Cluster Forecasting of Corruption Using Nonlinear Autoregressive Models with Exogenous Variables (NARX)—An Artificial Neural Network Analysis

Any effort to combat corruption can benefit from an examination of past and projected worldwide trends. In this paper, we forecast the level of corruption in countries by integrating artificial neural network modeling and time series analysis. The data were obtained from 113 countries from 2007 to 2017. The study is carried out at two levels: (a) the global level, where all countries are considered as a monolithic group; and (b) the cluster level, where countries are placed into groups based on their development-related attributes. For each cluster, we use the findings from our previous study on the cluster analysis of global corruption using machine learning methods that identified the four most influential corruption factors, and we use those as independent variables. Then, using the identified influential factors, we forecast the level of corruption in each cluster using nonlinear autoregressive recurrent neural network models with exogenous inputs (NARX), an artificial neural network technique. The NARX models were developed for each cluster, with an objective function in terms of the Corruption Perceptions Index (CPI). For each model, the optimal neural network is determined by fine-tuning the hyperparameters. The analysis was repeated for all countries as a single group. The accuracy of the models is assessed by comparing the mean square errors (MSEs) of the time series models. The results suggest that the NARX artificial neural network technique yields reliable future values of CPI globally or for each cluster of countries. This can assist policymakers and organizations in assessing the expected efficacies of their current or future corruption control policies from a global perspective as well as for groups of countries.

International Differences in Crime Reporting: A Multilevel Exploration of Burglary Reporting in 35 Countries

Our knowledge about crime, and the ability to help victims, is only as good as the information that is shared with us. However, crime reporting is known to be variable, and much research has been done to look at factors that influence the decision to report. Few studies, though, have looked at whether, and how, the country context impacts a victim’s decision to report crime. Using data from the International Crime Victims Survey and available data on corruption, income inequality, development, and democracy, this article explores that relationship for burglary reporting in 35 different countries through multilevel models. The results confirm that there is significant variation among countries in terms of burglary reporting. In addition, models that take into account both micro- and macro-level predictors show that country-level crime prevalence, democracy, corruption, and income inequality significantly predict burglary reporting and provide support for using Freda Adler’s conception of “synnomie” and anomie as a theoretical framework for understanding the crime reporting decision internationally. Future research should continue to examine crime reporting decisions cross-nationally, as this research has shown the importance of sample composition and crime type on findings, and test the influence of macro-level factors, especially relating to “synnomie,” over time.

The relationship between corruption and chronic diseases: evidence from Europeans aged 50\xa0years and older

ObjectivesDo people living in more corrupted countries report worse health? We answer this question by investigating the relationship between country-level corruption and the number of chronic diseases for a sample of Europeans aged above 50.MethodsWe link a rich panel dataset on individual health and socio-demographic characteristics with two country-level corruption indices, analyse the overall relationship with pooled ordinary least squares and fixed-effect models, explore heterogeneous effects driven by country and individual factors, and disentangle the effect across different public sectors.ResultsIndividuals living in more corrupted countries suffer from a higher number of chronic diseases. The heterogeneity analysis shows that (1) health outcomes are worsened especially for respondents living in relatively low-income countries; (2) the health of females and people with poor socio-economic status is more affected by corruption; (3) the corruption–health negative link mainly occurs for cardiovascular diseases and ulcers; (4) only corrupted sectors linked with healthcare are associated with poorer health.ConclusionsWe inform the policy debate with novel results in establishing a nexus between corruption and morbidity indicators.

Compliance with IFRS for related party transactions across eight African countries: do corruption and government quality matter

This paper tries to investigate two research questions in eight African countries. First, we examine the effect of country-level corruption culture on compliance with the International Accounting Standard 24 Related Party Disclosures (CRPD). Second, we examine the effect of country-level government quality on CRPD. Focusing on a sample of 537 listed African firms over the 2012-2014 period, we use panel regressions. Our results show that corruption is negatively associated with CRPD, while government quality seems not to play a key role in explaining CRPD when corruption is simultaneously considered. This paper contributes to the compliance literature by examining the effect of corruption and government quality on CRPD in African countries, an understudied context where the corruption and the IFRS enforcement are a big problem. It also contributes to the corruption literature that examines the effect of corruption on firm behaviours.

Culture, corruption, and women in government

Previous studies have posited that women are less tolerant of unethical behaviors than men and have found that countries with a greater percentage of women in government are associated with lower levels of corruption. Nonetheless, recent studies have hypothesized that the effect of women on corruption is dependent on institutional and cultural environments in which they work. The aim of this study is to empirically test if the effect of women in government on country-level corruption is dependent on culture using cross-country data. Through a series of regressions, moderating terms between women in government and Hofstede’s cultural dimensions are added to empirically test the moderating effect of culture. This study offers empirical evidence that the effect of women in government on corruption is dependent on Hofstede’s individual cultural dimension, supporting recent claims that the effect of women on corruption is indeed dependent on cultural contexts.

The Efficient Corruption Hypothesis and the Dynamics Between Economic Freedom, Corruption, and National Income

Corruption is an endemic problem in many developing economies. As a result, economists and political scientists have extensively studied corruption and its relationship to economic prosperity. An important mediating factor is the level of economic freedom. Determining causality is difficult as income, economic freedom, and corruption are arguably endogenous. We explicitly model this endogeneity using a panel Vector Auto Regression (pVAR) framework. The pVAR models we estimate are able to explicitly model this endogeneity better than the single-equation panel data models previously used in the literature. We have three primary data sources. Gross Domestic Product (GDP) per capita from the World Bank measures national income. Country-level corruption data comes from the World Bank's Control of Corruption database. The source of our country-level measure of economic freedom is the Fraser Institute's Economic Freedom of the World annual report. Our data set runs from 2002-2013 for over one hundred countries. We begin our results by finding that income, corruption, and economic freedom are integrated, but not cointegrated, thus a pVAR is appropriate. A one-time increase in corruption has a negligible effect on economic freedom and national income. An increase in economic freedom decreases corruption and increases GDP per capita. Increases in national income have no meaningful effect on corruption but have a small and positive effect on economic freedom. We then split our sample to see if there is a difference in results between high economic freedom countries and low economic freedom countries and do not find a difference. In summary, economic freedom decreases corruption and improves the economy and these results hold regardless of the level of economic freedom or whether corruption is absolute or relative. The policy implications from our research are straightforward. To the extent that resources to devote towards corruption are scarce, a focus on improving economic freedom not only leads to less corruption, but higher national income.

The experience and perception of corruption: A comparative study in 34 societies

In this article we show that perceptions of corruption and the experience of bribery are related theoretically and empirically at the individual level, although the magnitude of this association relies on two context variables, country-level corruption and press freedom. For that purpose, we propose a sociological approach to understand how people form “mental images” of corruption beyond (as well as based on) their personal experience of bribery. We test its main implications using a cross-national approach based on ISSP's 2016 Role of Government module and the national-level predictors suggested by our theoretical framework and the specialized literature. Using multilevel models, we find that the generalized perception of corruption is associated with the personal experience of bribery and that this association is stronger in countries where corruption is relatively absent and press freedom is high, i.e., developed countries, and is weaker otherwise, i.e., developing countries.

The impact of corruption on analyst coverage

PurposeThis study aims to investigate the impact of country-level corruption and firms’ anti-bribery policies on analyst coverage. Analyst coverage has been identified as a powerful tool to detect fraud and should equally act as a possible tool to reduce corruption.Design/methodology/approachThis study used a negative binomial count regression method on a longitudinal data set of a sample of S&P Global 1200 companies for the years 2010-2015. To control for potential endogeneity bias and improve the reliability of the estimation, both country-level corruption and firms’ anti-bribery policies variables were instrumented.FindingsAfter controlling potential endogeneity bias, the results show that the adoption of anti-bribery policies at firm level attracts more analysts to follow a firm. The results for corruption at country level show that analyst coverage increases in less corrupted countries indicating that the costs of corruption exceed its potential benefits. When the variables corruption at country level and anti-bribery policies are interacted, the relationship is positive and highly significant.Practical implicationsGiven the potential important role played by anti-corruption measures, firms are encouraged to adopt them to reduce the incidence of corruption and to increase analyst coverage, which will reinforce the benign effect of monitoring.Originality/valueAlthough the literature on corruption at the country level is rich, it is geared towards the determinants of corruption in contrast to its consequences, and fewer studies have focused on the impact of corruption at firm level because of data limitations. This paper addresses this gap and contributes to the literature on the consequences of corruption at firm level.

Country-level corruption and accounting choice: Research & development capitalization under IFRS

International Accounting Standard 38 Intangible Assets mandates that development costs must be capitalized if certain conditions specified in the standard are met. However, this requires managerial judgement and hence may be subject to opportunism. Corruption is a permeable informal country characteristic that penetrates firms’ behaviour, influencing corporate misconduct. We conjecture that an environment with high corruption facilitates management in their justification of meeting the capitalization criteria of assets that should have been expensed, either partly or entirely. These capitalized assets will not generate the future economic benefits implicitly conveyed by their recognition. This recognition, however, sends positive (albeit distorted) market signals for future earnings and increases current year reported earnings. We find that there is a positive relation between country-level corruption and the amount of development costs capitalized in a given year. Moreover, the higher the levels of country corruption, the lower the contribution of capitalized development costs in a given year to future profitability. Finally, this association is moderated by companies’ levels of internationalization.

What is the impact of corruption on audit fees?

ABSTRACTThis study examines the impact of country-level corruption on audit fees. Using a sample of 102,934 companies from 48 countries over the period 1998–2014, the authors find that audit fees are positively associated with higher levels of corruption. They also discovered that corruption adds a significant margin to the premium paid to Big 4 (Deloitte Touche Tohmatsu, PricewaterhouseCoopers, Ernst & Young and KPMG) auditors. The study opens up a new line of research and adds significantly to the academic literature on the Big 4 audit premium.IMPACTThe study has several important implications for academics and policy-makers. These include discussion of the factors driving corruption and the role of auditing. Knowledge of the factors driving corruption should guide policy-makers to adoption of polices that could reduce corruption. The finding that audit fees are positively associated with corruption, as well as with audit quality, points to the potential for auditing as a tool for corruption control beyond its traditional role as an assurance service.

Corruption and audit market concentration: an international investigation

ABSTRACTThis paper examines the association between the corruption level of a country and audit market concentration. Using a sample from 78 countries over the 2003–2012 period, we document a positive association between corruption and Big 4 audit market concentration, suggesting that in more corrupt countries, the audit market at the industry level is dominated by one or two Big 4 audit firms rather than shared equally. To provide further understanding about how corruption is associated with Big 4 audit market concentration, we conduct a path analysis and find that corruption has an indirect effect on audit market concentration through collusion. These results are consistent with the notion that corrupt governments do not effectively control collusion and thus decrease market competition, leading to a decrease in the perceived severity of information leakage and a lower concern about sharing a common auditor. Finally, we conduct a battery of sensitivity tests. Our results are robust to change analysis, to controlling for other factors that are likely to influence auditor choices and the market structure, to an alternative measure of concentration, and to alternative samples. Overall, we provide evidence to suggest that country-level corruption plays a role in Big 4 audit market concentration.

SME Growth, Financing Constraints, and Corruption: Evidence from Transition Economies

In this study, using a unique firm-level survey database, I investigate which firm constraints in the business environment directly affect growth for over 15,000 mostly small- and medium-sized firms in 30 Eastern European and Central Asian countries. I also examine how financing constraints inhibit firm growth, the determinants of firm financing constraints, and the relevant role of country-level development, institutions, and corruption. I find that out of a full set of ten different growth constraints in the business environment that firms report, only financing and legal constraints negatively affect both firm sales and employment growth. I also find that older, larger, and foreign-owned firms report lower financing constraints while exporting firms report higher financing constraints. In countries with higher levels of GDP per capita, stock market development, legal systems and property rights, and lower levels of corruption, firms face lower levels of financing constraints. I provide novel empirical evidence that both firm- and country-level corruption hinder firms’ access to financing.

Government ownership, financial constraint, corruption, and corporate performance: International evidence

Using a sample of 8232 firms from 81 countries, we investigate the effect of government ownership on financial constraint and the effect of financial constraint on corporate performance. In addition, we address the moderating role of country-level corruption on those two relationships. Results show that government-owned firms face fewer financial constraints and that firms with fewer financial constraints perform better. Furthermore, we find that the association between government ownership and financial constraint and the association between financial constraint and corporate performance are less pronounced for firms operating in countries with a lower level of corruption.

Three Essays on Corruption, Government Transparency and Foreign Direct Investment

The big question of this dissertation summary is: “How does firm-specific technology disruptiveness affect the relationship between country-level corruption distance, host government transparency, and MNE’s decision to expand in an emerging market?” The objective is to offer insight on how MNEs and government can collaboratively achieve greater progress on curbing corruption and on stimulating economic progress and sustainability in emerging markets.

Country Level Corruption and Accounting Choice: Research & Development Capitalisation Under IFRS

International Accounting Standard 38 Intangible Assets mandates that development costs must be capitalized if certain conditions specified in the standard are met. However, this requires managerial judgement and hence may be subject to opportunism. Corruption is a permeable informal country characteristic that penetrates firms’ behaviour, influencing corporate misconduct. We conjecture that an environment with high corruption facilitates management in their justification of meeting the capitalization criteria of assets that should have been expensed, either partly or entirely. Effectively, these capitalized assets will not generate the future economic benefits implicitly conveyed by their recognition. This recognition, however, sends positive (albeit distorted) market signals for future earnings and increases current year reported earnings. We find that there is a positive relation between country-level corruption and the amount of development costs capitalized in a given year. Moreover, the higher the levels of country corruption, the lower the contribution of capitalized development costs in a given year to future profitability. Finally, this association is moderated by companies’ levels of internationalization.