Foreign ownership and bribery: Agency and institutional perspectives |
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Authors: | Jingtao Yi Da Teng Shuang Meng |
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Affiliation: | 1. School of Business, Renmin University of China, No. 59 Zhongguancun Street, Haidian District, Beijing 100872, China;2. Coventry Business School, Coventry University, Priory Street, Coventry CV1 5FB, UK |
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Abstract: | In this study we examine the effectiveness of formal institutions (as the macro-level mechanism) and external auditing (as the micro-level mechanism) in controlling multinational firms’ engagement in bribery. We adopt World Bank’s data and investigate 38,673 firms in 113 countries. Our results suggest that a firm’s engagement in bribery is positively related to its foreign ownership. Furthermore, we demonstrate the substitute effects of formal institutions and external auditing in controlling this unethical activity. We argue that in a situation whereby formal institutions are weak, a firm’s internal governance mechanism plays a vital role in controlling bribery. |
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Keywords: | Bribery Institutions Auditing Multinational firms |
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