Combatting bribery and corruption: does corporate anti-corruption commitment lead to more or less audit effort?

Ahmed A. Sarhan and Christopher J. Cowton

Accounting Forum, 2025, vol. 49, issue 4, 754-777

Abstract: Firms and their external auditors can both help to combat the international scourge of business-related bribery and corruption. However, previous empirical research has not investigated whether the two are related and, if so, how. This paper examines whether auditors reduce their own effort in response to firms’ anti-corruption policies and actions, or whether firms that are committed to combating corruption require their auditors to undertake more effort. Based on 2,012 firm-year observations of UK FTSE 350-listed nonfinancial firms over the period 2002–2016 and using audit fee as a proxy for audit effort, our results indicate a positive and significant association between audit fees and corporate anti-corruption commitment, suggesting that firms that have stronger anti-corruption commitment actively involve their auditors in their agenda. Further analysis finds that internal (managerial) and external (institutional) shareholdings negatively moderate the link, indicating their contribution as governance mechanisms to mitigate agency conflict and reduce audit risk, and therefore payment of lower audit fees. The findings are robust across several modelling specifications, different measures of variables, different subsamples and addressing possible endogeneity issues. Suggestions for further research are discussed, as are the implications for policy and practice, especially in relation to how firms and their auditors can complement each other’s contributions to the anti-corruption agenda.

Date: 2025
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DOI: 10.1080/01559982.2024.2327923

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