Corruption, national culture and corporate investment: European evidence

Conrado Diego García-Gómez, Ender Demir, José María Díez-Esteban and Edmundo Lizarzaburu Bolaños

The European Journal of Finance, 2024, vol. 30, issue 4, 411-429

Abstract: In this paper, we provide further evidence about the influence of corruption on corporate investment. Using a large sample of the European region non-financial firms for the period 2011–2020, our results suggest that corruption in Europe negatively affects corporate investment, thus, supporting the ‘sanding the wheel' hypothesis. This relationship is moderated by all six dimensions of the national culture proposed by Hofstede. Using appropriate panel data methodology, namely GMM estimations, we find that a higher degree of uncertainty avoidance, power distance, masculinity, and indulgence exacerbate the adverse effects of corruption on corporate investment while a higher degree of long-term orientation and individualism alleviates this effect.

Date: 2024
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DOI: 10.1080/1351847X.2022.2147443

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