The Shareholder–Manager Relationship and Its Impact on the Likelihood of Firm Bribery (original) (raw)
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SSRN Electronic Journal, 2000
We study how bribe behaviour by firms varies with ownership structure in the framework of agency theory. Firms with owner-or shareholder-managers have a lower propensity than professionally managed firms to bribe corrupt officials to obtain illegal gains in the cases of legal or regulatory violation, but when they do bribe, owner-or shareholder-managed firms pay larger bribes. In contrast, when bribes are extortionate, bribe propensity and size do not differ with ownership structure. These supply side results persist in equilibrium where the chances of inspection are endogenously determined. The extension of the agency model to bribery provides insights into the design of effective anti-corruption strategies.
Management and Organization Review, 2015
ABSTRACTTo examine the bribing behavior of firms, we developed a cross-level moderation model using agency theory at the firm level and anomie theory at the societal level to investigate the relationship between manager control of firms and firm bribery activity. The results of this cross-cultural analysis using a sample of 1,799 firms from 38 nations showed that at the firm level, manager-controlled firms (MCFs) have a higher propensity to bribe than shareholder-controlled firms. At the country level, bribery is higher in MCFs (relative to shareholder-controlled firms) in societies with a low level of institutional collectivism, a high level of uncertainty avoidance, economic change, and income inequality. Contrary to the hypothesis, the relationship between bribery and manager control is stronger rather than weaker in societies with press freedom. Implications for future research and practices are discussed.
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HO CHI MINH CITY OPEN UNIVERSITY JOURNAL OF SCIENCE - ECONOMICS AND BUSINESS ADMINISTRATION, 2022
Using findings on existing literature from 1986 to 2020, this paper provides an overview on understanding the theories, the determinants to explain bribery offering behavior, and the influence of paying bribes on firm performance. Based on our knowledge, we have found that there are three common theories including principal agent, residual control right and bargaining power theories that researchers have used to understand the motivation of paying bribes. Extant studies have shown supportive evidence that alongside business environment, both firm factors and business owner and manager characteristics have significant effects on a decision of paying bribes. Firms with high vulnerable exposure, such as young firms, firms with small and medium sizes, firms depending much on public services, or service firms, are more likely to pay bribes than others. Previous studies show both positive and negative effects of paying bribes on firm performance. However, vulnerable firms seem not to get ...
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We study the effects of corruption on firm efficiency using a unique dataset of private firms from 14 Central and Eastern European countries from 2000 to 2013. We find that an environment characterized by a high level of corruption has an adverse effect on firm efficiency. This effect is stronger for firms with a lower propensity to behave corruptly, such as foreign-controlled firms and firms managed by female CEOs, while local firms and firms with male CEOs are not disadvantaged. We also find that an environment characterized by considerable hetero-geneity in the perception of corruption is associated with an increase in firm efficiency. This effect is particularly strong for foreign-controlled firms from low corruption countries, while no effect is observed for firms managed by a female CEO.
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Stephen P. Ferris, Kose John, Anil K. Makhija (Eds.) Advances in Financial Economics,15, 195-238., 2012
Purpose-This study explores the probability of expropriation of minority shareholders by controlling shareholders in the form of CEO compensation under an imperfect governance institution by using a novel Chinese dataset over 2001-2010. Design/methodology/approach-We use a direct method to gauge controlling shareholders' tunneling and expropriation of minority shareholders, and we present a simple model to link corporate governance and the degree of entrenchment by the largest shareholder. We use both Logit and Probit models to predict the likelihood of tunneling and use two-stage least square (2SLS) regression to address the endogeneity issues. Findings-There are significant deterioration effects between controlling shareholder's tunneling and firm performance. Firms with more tunneling activities typically have larger controlling ownership, greater evidence of state control, less balance of power among large shareholders, and weaker board characteristics.
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Unpublished University of Florida …, 2007
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CEO Accountability for Corporate Fraud: Evidence from the Split Share Structure Reform in China
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