Private Gain Research Articles

Women and Corruption

Transparency International, the global coalition against corruption, defines corruption as “the abuse of entrusted power for private gain. It hurts everyone who depends on the integrity of people in a position of authority.” Corruption has a devastating impact on the social, economic, ethical and mental wellbeing of human beings as an individual and community. In Islam, any form of corruption ( fasad ) like bribery, extortion, kickback and illegal gratuity are strictly prohibited by the texts. The Qur´an enjoins the believers not to consume their property among themselves unjustly and not to give bribes to the rulers that may sinfully and knowingly lead to devouring of the property of others ( al-Baqarah 2:188). In several other verses, the text also condemns all forms of economic and political oppression and proscribes spreading of mischief and corruption on the earth ( al-Qasas  28:4 and al-A'raf 7:56). The Prophet Muhammad (peace be upon him) has said that the bribe-taker, the bribe-giver and their mediator, all of them invoke God’s wrath.Â

The Political Origins of Transparency

Transparency has been hailed as the key to better governance, yet political actors have many reasons to resist transparency. This article studies one prominent transparency policy, Freedom of Information (FOI) laws, which have been passed by over 80 countries. By institutionalizing transparency, FOI laws increase the costs for political actors to use public office—and public information—for private gain. Why have so many states passed FOI laws despite this? I argue that, in competitive political environments, FOI laws can create benefits for political actors as well as costs. Uncertainty over future control creates incentives for incumbents to pass FOI laws in order to ensure their own future access to government information and to credibly commit to future transparency. Event-history-model results show that FOI law passage is more likely when opposition parties pose more credible challenges to incumbents and when recent turnover in executive office has been frequent.

Understanding teacher entrepreneurship in the globalized society

Purpose– Social entrepreneurship aims at creating social value for the public good rather than personal wealth or private gain as in the case of commercial entrepreneurship. The purpose of this study was to explore the entrepreneurial activities of self-starter teachers and analyze the factors that facilitate or inhibit the appearance of these activities using the concept of organizational citizenship behavior (OCB) that are neither part of the formal reward system nor a part of an employee's mandatory job description.Design/methodology/approach– Semi-structured interviews with 30 teachers and ten principals from the Israeli elementary and secondary educational system.Findings– It was found that self-starter teachers engage in simple forms of innovative work behaviors (e.g. developing new curricula and teaching methods, initiating and implementing new projects, including school events). Additionally, the teacher's decision to go the extra-mile and initiate new projects or devise new curricula is related, though, to four major determinants, two of them external (e.g. the principal, the local education authority) and two internal (personal experiences, educational calling and emotional commitment).Originality/value– The paper sheds light on educational entrepreneurship through the concept of OCB.

SOCIO-POLITICAL AND ECONOMIC IMPACTS OF CORRUPTION IN NIGERIA

Corruption is one of the oldest and most perplexing phenomenona in human society, political corruption exists in every country and it is not exclusively a problem of developing countries. Etymologically, the word corruption is derived from the Latin word “rumpere”, meaning to “break”. This connotes the breaking of normal or societal norms or practices. While the destructive nature of corruption is less contentious, the definition of what constitutes corruption tends to defile consensus among scholars and institutions. Corruption can be defined as the abuse of public office for private gain. Similarly, corruption can be defined as the abuse of public power for private gain. Corruption is behaviour which deviates from the formal duties of a public role (elective or appointive) because of private regarding (personal, close family, private clique) wealth or status gains; or violates rule against the exercising of certain private regarding influence. This study tends to examine socio-political and economic impacts of corruption in Nigeria.

Uninvited U.S. Investors? Economic Consequences of Involuntary Cross‐Listings

ABSTRACTWe study the economic consequences of a recent Securities and Exchange Commission securities regulation change that grants foreign firms trading on the U.S. over‐the‐counter (OTC) market an automatic exemption from the reporting requirements of the 1934 Securities Act. We document that the number of voluntary (sponsored) OTC cross‐listings did not increase following the regulation change, suggesting that it did not achieve its intended purpose of increasing voluntary OTC cross‐listings through a reduction in compliance costs. We do find that the design of the regulation allowed financial intermediaries to create an unprecedented number of involuntary (unsponsored) OTC ADRs: 1,700 unsponsored ADR programs for 920 firms were created for companies that had previously chosen not to cross‐list in the United States. Our difference‐in‐differences analysis based on a matched sample approach documents that foreign firms forced into the U.S. capital markets experience a significant decrease in firm value, and we further show that the decrease in firm value is related to an increase in U.S. litigation risk. We also find that depositary banks’ propensity to involuntarily cross‐list firms is positively related to banks’ expected fee revenue, and that banks chose firms that incur high costs when involuntarily cross‐listed. Our results provide evidence that securities regulation can be exploited for private gain and result in costly unintended consequences.

Regulatory Safeguards for Accountable Ecosystem Service Markets in Wetlands Development

The use of environmental markets creates the potential for achieving environmental protection goals more efficiently than traditional regulation is capable of doing. Past experience with emissions trading programs and other forms of environmental markets that operate in conjunction with traditional regulatory programs, however, illustrates the risks that accompany reliance on market-based strategies. In particular, participants in environmental regulatory markets have in some instances manipulated them to enhance private gain while undercutting public environmental objectives. Using the wetlands mitigation component of the federal Clean Water Act’s dredge and fill permit program as an example, this essay recommends that market-based environmental programs incorporate five different types of safeguards to promote the accountability of both market participants and the agencies supervising the operation of those programs. Reliance on financial safeguards, verifiable performance standards, transparency and public participation safeguards, oversight mechanisms such as monitoring and inspections, and rule of law safeguards can preserve opportunities for efficient achievement of environmental protection goals while reducing the risk that markets will be used to subvert those goals.

Efficiency and Influence in the Deployment of Human Assets: Evidence from M&A Legal Advisors

We examine how firms deploy their human assets under efficiency considerations, and how individuals seek to influence these deployment decisions for private gain. Our empirical context is the UK M&...

The Dark Side of Business with Chinese Characteristics

Corruption has often been defined as the use of authority for private gain, with authority frequently assumed to be defined as official authority. Private actors, including corporate officers, can also exercise the authority granted them by a firm or other organization for improper private gain. Not only can private parties engage in corrupt transactions with public officials, they may also engage in corrupt transactions with other private parties, thus creating a form of “private corruption” that has been largely ignored, even though the presence of private-to-private corruption likely contributes to both private-to-public and public-to-public corruption. Evidence exists, in fact, of extensive inter-business in China and hence the presence of a corporate “culture of corruption.

THE CAUSAL RELATIONSHIP BETWEEN CORRUPTION AND POVERTY IN ASEAN: A GENERAL METHOD OF MOMENTS/ DYNAMIC PANEL DATA ANALYSIS

It has been noted by public that corruption is a practice that can be considered an extra ordinarycrime that has happened in developing countries. Such a common misuse of publicaffair is conducted for private gain, including but not limited to: corruption, nepotism, bribery,extortion, influence peddling and fraud. In Indonesia, corruption has been around foryears and increased dramatically in recent years. It distorts markets and the allocation ofresources. This research examines the Granger causal relationship between corruption andpoverty with panel data of 9 ASEAN countries during the period of observation 2005-2009. Ituses the generalized method of moments/dynamic panel data (GMM/DPD) and focuses oncapability poverty using human development index (HDI). The major results show that povertydoes not affect corruption meanwhile corruption causes poverty. There is unidirectionalcausality, from corruption to poverty.

Optimal Policy and the Role of Social Contacts in a Search Model with Heterogeneous Workers

This paper develops a search model with heterogeneous workers and social networks. High ability workers are more productive and have a larger number of professional contacts. Firms have a choice between a high cost vacancy in the regular labour market and a low cost job opening in the referral market. In this setting the model predicts that a larger number of social contacts is associated with a larger wage gap between high and low ability workers and a larger difference in the equilibrium unemployment rates. Next we demonstrate that the decentralized equilibrium is inefficient for any value of the bargaining power. There are two reasons for the inefficiency. First, the private gain from creating a job in the referral market is always below the social gain, so the equilibrium unemployment of high ability workers is above its optimal value. Moreover, high ability workers congest the market for low ability workers, so the equilibrium wage inequality is inefficiently large. This is in contrast to the result of Blazquez and Jansen (2008) showing that the distribution of wages is compressed in a search model with heterogeneous workers. Finally, we show that a combination of taxes and subsidies can restore the optimal allocation.

Building a New Populist Movement

The institutional and cultural arrangements of political and economic power in the United States are such that it is foolish to think that the President of the United States represents the “People” in any real sense other than figuratively. Yet, America's founders created a governmental structure that offers fissures and pressure points in the political system at which dominance by the rich is not complete and total. Progressives need to understand this reality thoroughly and use it ruthlessly to leverage political power where it can do the most good. Progressives must build capacity for political change from the grassroots up by focusing first on down-ticket offices at the state and local levels. Last but not least, they must also develop practical solutions to the root source of all our problems: financial and monetary systems organized for private gain, at the expense of the general welfare. In this they can follow the lead of the Populist movement of the late nineteenth and early twentieth centuries.

The Political Economy of State Capture in Central Europe

AbstractThis article demonstrates that most new EU Member States experience serious problems of state capture. It argues that central European states cluster around two dominant modes of party competition. In the first, predominantly ideologically committed elites (Poland, Hungary, Estonia, Slovenia and Estonia) established relatively ‘electoral professional’ party competitions, only to face deepening fiscal constraints on mainstream ideological competition. Following the collapse of the social democratic left, both Hungary and Poland experienced attempts to reassert political monopoly, i.e., ‘party state capture’. In the second group (Czech Republic, Slovakia, Romania, Bulgaria and Latvia), more entrepreneurial political elites established ‘brokerage’ party systems, in which public policy remains a side‐product of an essentially economic competition. All five states show high levels of ‘corporate state capture’ in which public power is exercised primarily for private gain. These findings contest the more optimistic expectations of the institutionalist literature on state‐building and democratic consolidation.

Owner Theory of the Firm, Corporate Malfeasance and Economic Predation: Principal and Agent Behavior, Costs, and Governance

The global financial crisis of 2008 illustrates the recent notion of a economy (Galbraith, 2006). This begins to answer the question of why near catastrophic corporate malfeasance exists with serious damaging consequences to the global financial system and the real economy. Indeed, they persist despite the well known recognition, theory and application of principal-agent controls and governance. Thus, corporate malfeasance is too big a problem to be dealt with by principal-agent and governance norms. A new theory of the firm, Owner theory offers to explain the nature of corporate malfeasance; it is caused by predatory Owners rather than bad agents. This theory offers a new perspective on the theory of the firm based on the well known agency theory of Jensen and Meckling (1976). As a corporate governance theory, it addresses how a type of capital provider, the predatory Owner gets a return from his investment. Predatory Owners are greedy, cunning and skillful players in a predatory economy. They seek activist and controlling roles in governance to prey upon the wealth of other claim holders'. Such Owners see themselves as being too big and powerful to fail and are emboldened to gamble with and to exploit the firm's wealth for private gain because they are protected by the defining legal features of a corporation (i.e. limited liability, easy transfer of ownership, and agency relationship). They capture the agent manager with non-arms length contracts to help them control the firm and impose severe owner and agent costs and risks to the firm and to society. This is the “Owner Problem or Conflict”. To protect us against economic predation, creating new rules and laws which shed light on large block Owners and hold them liable in corporate malfeasance are recommended. As well, active block holders and founders in the ownership of firms can counteract against predatory Owners.

The politics of anti-corruption enforcement in South Africa

The criminalisation of corruption recognises that the misuse of official office for private gain exacts a detrimental and distorting effect on a country's social and economic development. This is especially acute in countries undergoing rapid political system transitions. In an effort to combat corruption, governments have come under increasing pressure to enhance the monitoring and oversight of public institutions through stringent intra and inter-institutional checks. In South Africa, the evidence clearly shows that concrete and incremental steps have been introduced since the country's democratic transition to regulate malfeasance in the public sector through heightened monitoring, prevention, investigation and prosecution measures. Despite these measures, intra and inter-institutional analysis of anti-corruption enforcement indicates that the integrity of this approach, informed by principle-agent accountability arrangements, can be compromised or side-lined by collective action efforts that undermine the effectiveness of anti-corruption mechanisms. This reflects a politicisation of anti-corruption enforcement.

The Future of Campaign Finance Reform Laws in the Courts and in Congress

The objective of campaign finance regulation has been incorrectly formulated. The main goal of campaign finance laws articulated by judges and legislators has been to eliminate a certain kind of corruption from the political system. This corruption is described as a subtle kind of bribery where large campaign contributions are used to motivate particular kinds of legislative behavior. The Court is struggling with an issue that has long beset judges and others attempting to distinguish corrupt activity on the part of government officials from politics as usual. At the extreme, corruption is easy to identify in return for some private gain, a public official performs an act she would otherwise not perform. The problem arises when the act is one that the official probably would have performed whether or not she received the benefit, and/or when the benefit is something allowed by the political system, such as campaign contributions to officials whose policies and ideology the contributor supports. Relying on the desire to eradicate institutional corruption as the guiding rationale for campaign finance reform efforts is problematic for reasons I discuss in the first part of this article. The primary problem lies in the difficulty of determining when a member of Congress is too compliant with the wishes of some of her constituents and when she is properly responsive to the people who elected her. Because the notion of institutional corruption that seems to propel most campaign finance reform and that structures the court's analysis is difficult to define precisely and may not be a concern usefully addressed through campaign finance reform without larger, and politically unlikely, changes in the distribution of wealth and other resources, we would do better to reformulate the objectives of campaign finance entirely. I propose that Congress shift its orientation and work to devise a system of campaign finance laws that empowers people to make decisions in their own interests. Congress would thus adopt as its guiding principle the objective of improving voter competence. A system dedicated to enhancing voter competence would enable citizens to get the information necessary to vote in accordance with their preferences and to hold politicians accountable for their decisions. I conclude by arguing that the objective of voter competence justifies a campaign finance system that regulates only through aggressive disclosure, but I also suggest that such a system faces constitutional and logistical challenges. It is such challenges that should command our attention, not the hopeless task of enacting increasingly Byzantine restrictions on soft money, issue ads, and other political activity.

Government Financial Management, Strategy for Preventing Corruption in Indonesia

In popular view, the term accountability generally refers to a wide spectrum of public expectations dealing with organizational performance, responsiveness, good governance, and even morality of government and nonprofit organizations. These expectations often include implicit performance criteria – related to obligations and responsibilities – that are subjectively interpreted and sometimes even contradictory. And in this broader conception of accountability, the range of people and institutions to whom public and nonprofit organizations must account include not only higher authorities in the institutional chain of command but also the general public, the news media, peer agencies, donors, and many other stakeholders (Kearns, 1996). Government could build its accountability by implementing good and proper financial management. Financial management is a tool for government to show its performance and accountability to the public. Meanwhile, corruption is the misuse of public office for private gain. As such, it involves the improper and unlawful behavior of public-service officials, both politicians and civil servants, whose positions create opportunities for the diversion of money and assets from government to them and their accomplices (Langseth, 1999). The more corruption, the more far away from good governance, and the less public accountability. According to Klitgaard (1988), power minus accountability is corruption. This paper explains about the influences of implementing government financial management to corruption fighting and good governance in broadly view. Discussion will be derived to find out the understanding of financial management, corruption, and good governance terminology fits for Indonesia environment. The purpose of this paper is to achieve common knowledge that financial management should be implemented by public organization from strategic management for public organization approaches. Besides, reader will find out explanation from both theoretical approach and pragmatical approach as well. Keywords: Corruption, accountability, good governance, performance, financial management

On the dark side of the code: organizational challenges to an effective anti-corruption strategy

Corporations have been fighting for decades to eliminate corruption. However, despite the proliferation of compliance programs and a recurrent surge of interest in business ethics, commercial bribery prevails as a “rational choice strategy” for economic success and thus is widely regarded as the result of immoral choices of greedy individuals. This article reports on a modus operandi study concerning corruption within a large industrial corporation (Siemens AG). Results highlight the fact that neither consistent anti-corruption norms nor severe formal sanctions were able to deter certain employees from deviant behavior in this landmark case of structural corruption. Sociologists and business economists have both pointed to the organizational culture that provides an explanation for this paradox. The author compares three diverging hypotheses: (1) private gain, (2) cognitive normalization, and (3) organizational cultures, and concludes that the structural causes of corrupt practices fit the definition of ‘useful illegality’ (Luhmann). To a large extent, this old sociological concept resembles the criminological idea of corporate crime, but it emphasizes the cultural factors that undermine management’s preventive strategies, and thus holds the promise of theoretical progress. Implications that emerge from the case analysis for the social control of corporate bribe payers are discussed. The discussion reveals why challenges to successful anti-corruption efforts persist at the organizational level.

Integration of Child Care and Education in Canada: A Comparison with Sweden, New Zealand, England and Wales

StartingStrong (2001) andStartingStrongII (2006), the OECD Reports on early childhood education services in 20 countries, emphasized the need for governments to take steps to integrate early childhood education and care services: child care and kindergarten in particular. Integration has become a policy agenda that would meld the best of both worlds. It would increase the amount and quality of resources that are dedicated to out-of-home services for young children before school, ensure that these services are universally accessible as a right, and of low cost to parents, with stable employment for well-qualified staff able to implement a flexible, well-designed, play-based curriculum. In most countries with integrated systems, this has occurred under the aegis of education authorities, making it more likely that providers will be either public or not-for-profit agencies, dedicated to continual improvement in serving the interests of children rather than the objective of private gain. This paper compares Canadian developments in integration to those in Sweden, New Zealand, England and Wales. Context and history make the issues of integration somewhat different in Canada than in these countries. Overall, integration of early childhood education and care services in Canada is less developed than in Europe, but this paper reviews some promising recent reforms. In particular, the language of integration has been adopted widely by advocates, bureaucrats and some policy makers in Canada and a number of provinces have moved the administration and policy-making functions of child care services into the education ministry. However, Quebec’s low-fee child care reforms are built upon a traditional split system of services. Ontario’s reforms of services for 4- and 5-year olds are very important, but partial. Prince Edward Island has planned a more fully integrated new early education system, but the transition has only recently begun. This paper analyses context, history and political factors that have shaped Canada’s experiences of integration until now.

Leadership, Governance, and Poverty in Nigeria

The National Bureau of Statistics has said that 112.519 million Nigerians live in relative poverty conditions. The absolute measure puts the country’s poverty rate at 99.284 million. This paper attributes the poverty facing Nigerians to incompetent leadership and bad governance. Using Michael Lipton’s theory of ‘urban bias’ which posits that there is more poverty in the rural areas because of the existence of parasitical and corrupt urban elites, this paper points out that people in rural areas are most affected by poverty due to marginalization by government. It points out how bad governance has led to the persistence of the Dutch disease (or mono-cultural economic policy) and its effect on poverty. It also highlights the effect of corruption – the misuse of entrusted power for private gain – on poverty. The paper then presents a historical comparison of the effect of good leadership and bad leadership on poverty in Edo state since its creation in 1991. It concludes with cogent recommendations on the role of the government, the international community and the poor masses in tackling poverty via good leadership and governance. DOI: 10.5901/mjss.2013.v4n6p29

MANAGING CORRUPTION IN SOUTH AFRICA: THE ETHICAL RESPONSIBILITY OF CHURCHES

The South African society continues to stagger under an immense wave of corruption in both the private and the public sectors. Corruption is the misuse of public office or a position of authority for private, material or social gain at the expense of other people. The aim of this investigation is to discuss the phenomenon from a moral point of view and to suggest moral directives and ways that can assist the Christian churches to address corruption from a Christian ethical angle of approach. The church lives by its testimony and by its ministry. Based on this vocation the churches have the responsibility to engage in the struggle against corruption by raising ethical awareness and constantly reminding society at large of the plight of the poor. Pointing to Christ as the model of human conduct, the churches should enhance the deeper meaning of self-interest, honesty, fairness, responsibility, compassion, love and accountability. The development of an attitude of servanthood and stewardship according to the attitude of Christ is of specific importance in the process of raising ethical awareness. These values are much needed in a culture of corruption driven by self-interest and greed. And last but not least, the churches must always call for social justice and never refrain from reminding the prosperity-driven South African society that as long as the current large-scale poverty prevails, corruption will be difficult to curtail.