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Governance Research Digest – July 2012

Summary

The article examines the impact on firm bribery of two corporate governance devices heavily studied in corporate governance research—i.e., separation of ownership and control, and equity share of the largest shareholder. In addition, it investigates the impact of the principal–owner’s gender on firm bribery.

Key Findings

• From agency theory, authors predict that firms with the owner also acting as a manager (owner–manager) are more likely to engage in bribery compared to their counterparts with separation of ownership and control.
• Using a rich dataset of the World Bank Enterprise Surveys of 2002–2005, authors find that the equity share of the largest shareholder is negatively and male principal–owner is positively associated with the likelihood of firm bribery.
• Furthermore, they reveal that owner–manager is more likely to bribe when the principal–owner is male rather than female.
• Authors also observe that the effect of owner–manager is smaller as the equity share of the largest shareholder increases.

Author(s)

D. Ramdani and A. van Witteloostuij

Source

Journal of Business Ethics, 108 (4), 495-507

Tags: A. van Witteloostuij, bribery, D. Ramdani, Journal of Business Ethics, manager, shareholder