1 | Page The effect of corruption in management and board on firm performance in Europe Maurizio La Rocca University of Calabria www.mauriziolarocca.it [email protected] Neha Neha University of Calabria [email protected] Abstract Corruption, fraud and illicit activities have become worldwide the major impediment on economic, political and social development. While the existing empirical analysis is mainly based on measures of corruption at country level, this is the first empirical research work, out of some studies related to survey, based on a large dataset measuring corruption at businesses level. Using a cross-sectional data of 2,789 listed companies across 34 European countries, the aim of this study is to highlight the impact of corruption embedded inside the firm on corporate performance. Empirically, it is investigated what happens to firm performance considering whether the members of the board of director or members of the management, also at top level, are involved in such illegal matters. The empirical findings suggest that firm corruption acts as a vibrant constraint to its short-term as well as long-run performance, being also harmful to firm’s growth opportunities. Finally, we present evidence of the negative effect of corruption in terms of political connections and that corrupt behavior of females is even more severe for firm performance. Keywords: Corporate corruption, fraud, unethical behavior, corrupted managers, corrupted members of the board, firm performance. JEL Codification: G30
The effect of corruption in management and board on firm performance in Europe
Jul 06, 2023
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