Corruption culture and corporate misconduct

Xiaoding Liu

Journal of Financial Economics, 2016, vol. 122, issue 2, 307-327

Abstract: Despite significant interest in corporate culture, there is little empirical research on its role in influencing corporate misconduct. Using cultural background information on key company insiders, I construct a measure of corporate corruption culture, capturing a firm's general attitude toward opportunistic behavior. Firms with high corruption culture are more likely to engage in earnings management, accounting fraud, option backdating, and opportunistic insider trading. I further explore the inner workings of corruption culture and find evidence that it operates both as a selection mechanism and by having a direct influence on individual behavior.

Keywords: Corruption; Corporate culture; Corporate governance; Misconduct; Fraud (search for similar items in EconPapers)
JEL-codes: G34 M14 Z1 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (144)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinec:v:122:y:2016:i:2:p:307-327

DOI: 10.1016/j.jfineco.2016.06.005

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