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Corruption and corporate investment efficiency around the world

Author

Listed:
  • Xuan Minh Nguyen
  • Quoc Trung Tran
Abstract
Purpose - The paper investigates the effect of corruption on corporate investment efficiency around the world. Design/methodology/approach - The sample includes 218,350 observations from 30,074 firms across 42 countries. The authors measure corruption based on the Corruption Perception Index (CPI) from Transparency International, Corruption Control Index (CCI) from the World Bank and Corruption Index from the International Country Risk Guide. Findings - The authors find that corruption is negatively related to investment efficiency. The robustness checks with different measures of corporate investment and alternative regression approaches show consistent findings. Moreover, the authors also find that the effect of corruption is stronger (weaker) in strong (weak) shareholder protection countries. Originality/value - The paper has two important contributions to the literature. First, it shows that corruption environment is also a determinant of corporate investment efficiency. Second, legal protection of shareholders can mitigate the negative effect of corruption on corporate investment efficiency. 研究目的 - 本研究擬探討世界各地貪污腐敗對企業投資效率的影響。 研究設計/方法/理念 - 研究樣本涵蓋42個國家，30,074間公司，218,350個觀察。測量貪污腐敗的方法乃基於國際透明組織的腐敗感知指數、世界銀行的腐敗控制指數和國際國家風險指南的貪污指數。 研究結果 - 研究結果顯示、貪污與投資效率成負相關。以企業投資的各種測量方法、以及用其他的回歸分析方法來進行的強度檢驗，均顯示一致的結果。而且，我們亦發現，在對股東的保障較大的國家，貪污所帶來的影響也會較大；同樣地、對股東的保障較小的國家，貪污的影響也相應會較輕微。 研究的原創性/價值 - 本研究對文獻有兩個重要的貢獻。首先，研究證明了貪污腐敗的環境亦是企業投資效率的決定因素；其次，研究亦證明給股東的法律保護會減低貪污對企業投資效率所帶來的負面影響。

Suggested Citation

  • Xuan Minh Nguyen & Quoc Trung Tran, 2022. "Corruption and corporate investment efficiency around the world," European Journal of Management and Business Economics, Emerald Group Publishing Limited, vol. 31(4), pages 425-438, April.
    • Handle: RePEc:eme:ejmbep:ejmbe-11-2020-0321
    DOI: 10.1108/EJMBE-11-2020-0321
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    Citations

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    Cited by:

    1. Tran, Quoc Trung & Nguyen, Van Phong & Dang, Duong Huy Chuong & Nguyen, Ba Phong & Le, Phuong Linh, 2023. "Local corruption and capital structure," Finance Research Letters, Elsevier, vol. 55(PB).
    2. Fatima Saleh Abd Almajeed Al-Hamshary & Akmalia M. Ariff & Khairul Anuar Kamarudin & Norakma Abd Majid, 2023. "Corporate Risk-Taking and Cash Holdings: The Moderating Effect of Investor Protection," Capital Markets Review, Malaysian Finance Association, vol. 31(1), pages 1-23.

    More about this item

    Keywords

    Corruption; Investment efficiency; Investment; G32; G34;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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