The Role of a Free Press in Combating Business Corruption

Binhadab, Nouf and Breen, Michael and Gillanders, Robert (2018): The Role of a Free Press in Combating Business Corruption.

Abstract

Using firm-level data, we find that countries with greater press freedom have significantly lower incidences of bribery involving public officials. In particular, we find that a free press is associated with a substantial reduction in the percentage of firms that report corruption during interactions with tax officials and when obtaining construction permits. Furthermore, we find that fewer businesses in these countries report that corruption is the biggest problem that they face. These findings underline the role of an independent media in combating corruption.

• Item Type: MPRA Paper
• Language: English
• Keywords: corruption; firm behavior; bribery; press freedom
• Subjects: D - Microeconomics > D7 - Analysis of Collective Decision-Making > D73 - Bureaucracy ; Administrative Processes in Public Organizations ; Corruption; H - Public Economics > H1 - Structure and Scope of Government > H11 - Structure, Scope, and Performance of Government; H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H25 - Business Taxes and Subsidies; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O10 - General

References

Abbink, K., Irlenbusch, B. and Renner, E. (2002). An experimental bribery game. Journal of Law, Economics, and Organization 18(2), 428-454.

Adsera, A., Boix, C. and Payne, M. (2003). Are you being served? Political accountability and quality of government. Journal of Law, Economics, and Organization 19(2), 445-490.

Becker, G. S. (1968). Crime and punishment: An economic approach. Journal of Political Economy 76(2) 169–217.

Bednar, M. K. (2012). Watchdog or lapdog? A behavioral view of the media as a corporate governance mechanism. Academy of Management Journal 55(1), 131-150.

Bhattacharyya, S. and Hodler, R. (2015). Media freedom and democracy in the fight against corruption. European Journal of Political Economy 39(1),13-24.

Breen, M. and Gillanders, R. (2012). Corruption, institutions and regulation. Economics of Governance 13(3), 263-285.

Breen, M., Gillanders, R., McNulty, G. and Suzuki, A. (2017). Gender and corruption in business. Journal of Development Studies 53(9), 1486-1501.

Brunetti, A. and Weder, B. (2003). A free press is bad news for corruption. Journal of Public economics 87(7), 1801-1824.

Bushee, B.J., Core, J.E., Guay, W. and Hamm, S.J. (2010). The role of the business press as an information intermediary. Journal of Accounting Research 48(1), 1-19.

Cohen, J., Ding, Y., Lesage, C. and Stolowy, H. (2017). Media bias and the persistence of the expectation gap: An analysis of press articles on corporate fraud. Journal of Business Ethics 144(3), 637-659.

Charron, N. (2009). The impact of socio-political integration and press freedom on corruption. Journal of Development Studies 45(9), 1472-1493.

Chowdhury, S.K. (2004). The effect of democracy and press freedom on corruption: an empirical test. Economics Letters 85(1), 93-101.

Collins, J.D., Uhlenbruck, K. and Rodriguez, P. (2009). Why firms engage in corruption: A top management perspective. Journal of Business Ethics 87(1), 89-108.

Del Monte, A. and Papagni, E. (2001). Public expenditure, corruption, and economic growth: the case of Italy. European Journal of Political Economy 17(1), 1-16.

Djankov, S., La Porta, R., Lopez-de-Silanes, F. and Shleifer, A. (2002). The regulation of entry. Quarterly Journal of Economics 117(1), 1-37.

Dyck, A., Volchkova, N. and Zingales, L. (2008). The corporate governance role of the media: Evidence from Russia. Journal of Finance 63(3), 1093-1135.

El Ghoul, S., Guedhami, O., Nash, R. and Patel, A. (2016). New evidence on the role of the media in corporate social responsibility. Journal of Business Ethics, https://doi.org/10.1007/s10551-016-3354-9.

Fan, C.S., Lin, C. and Treisman, D. (2009(. Political decentralization and corruption: Evidence from around the world. Journal of Public Economics 93(1-2), 14-34.

Fisman, R. and Svensson, J. (2007). Are corruption and taxation really harmful to growth? Firm level evidence. Journal of Development Economics 83(1), 63-75.

Freille, S., Haque, M.E. and Kneller, R. (2007). A contribution to the empirics of press freedom and corruption. European Journal of Political Economy 23(4), 838-862.

Gillanders, R. (2014). Corruption and infrastructure at the country and regional level. Journal of Development Studies 50(6), 803-819.

Gupta, S., Davoodi, H. and Alonso-Terme, R. (2002). Does corruption affect income inequality and poverty? Economics of Governance 3(1), 23-45.

Hallin, D.C. and Mancini, P. (2004). Comparing media systems: Three models of media and politics. Cambridge: Cambridge University Press.

Jaakson, K., Johannsen, L., Pedersen, K. H., Maaja, V., Gaygysyz, A., Reino, A., Sööt, M. (2018). Crime, Law, and Social Change. https://doi.org/10.1007/s10611-018-9790-y.

Kalenborn, C. and Lessmann, C. (2013). The impact of democracy and press freedom on corruption: Conditionality matters. Journal of Policy Modeling 35(6), 857-886.

Kanagaretnam, K., Lee, J., Lim, C.Y. and Lobo, G.J. (2018). Cross-country evidence on the role of independent media in constraining corporate tax aggressiveness. Journal of Business Ethics 150(3), 879-902.

Kenny, C. (2009). Measuring corruption in infrastructure: Evidence from transition and developing countries. Journal of Development Studies 45(3), 314-332.

Knack, S. (2007). Measuring corruption: A critique of indicators in Eastern Europe and Central Asia. Journal of Public Policy 27(3), 255-291.

Krishnamurti, C., Shams, S. and Velayutham, E. (2018). Corporate social responsibility and corruption risk: A global perspective. Journal of Contemporary Accounting & Economics 14(1), 1-21.

Mauro, P. (1995). Corruption and growth. Quarterly Journal of Economics 110(3), 681-712.

Mawejje, J. and Sebudde, R.K. (Forthcoming). Constraints or Complaints? Business Climate and Firm Performance Perceptions in Uganda. Journal of Development Studies.

Razafindrakoto, M. and Roubaud, F. (2010). Are international databases on corruption reliable? A comparison of expert opinion surveys and household surveys in sub-Saharan Africa. World Development 38(8),.1057-1069.

Scannell, Kara (2016) VimpelCom fined $795m in corruption case. Financial Times. February 18th 2016. https://www.ft.com/content/e5f63772-d693-11e5-8887-98e7feb46f27. Access date: 27 August 2018.

Scholtens, B. and Dam, L. (2007). Cultural values and international differences in business ethics. Journal of Business Ethics 75(3), 273-284.

Shockley, B., Ewers, M., Nardis, Y. and Gengler, J. (2017). Exaggerating good governance: Regime type and score inflation among executive survey informants. Governance 31(4), 643-664.

Schoenberg, T. and Dolmetsch, C. (2017) Telia Agrees to Pay at Least $965 Million Over Uzbek Bribes. Bloomberg. September 21, 2017. https://www.bloomberg.com/news/articles/2017-09-21/telia-to-seal-u-s-deferred-prosecuton-deal-over-uzbek-bribes. Access date: 27 August 2018.

Tanzi, V. and Davoodi, H.R. (1997). Corruption, Public Investment, and Growth (No. 97/139). International Monetary Fund.

Themudo, N.S. (2013). Reassessing the impact of civil society: nonprofit sector, press freedom, and corruption. Governance 26(1), 63-89.

Treisman, D. (2007). What have we learned about the causes of corruption from ten years of cross-national empirical research? Annual Review of Political Science 10(1), 211-244.

Vaidya, S. (2005). Corruption in the media's gaze. European Journal of Political Economy 21(3), 667-687.

Wei, S.J. (2000). How taxing is corruption on international investors? Review of Economics and Statistics 82(1), pp.1-11.

Wu, X. (2009). Determinants of bribery in Asian firms: Evidence from the world business environment survey. Journal of Business Ethics 87(1), 75-88.