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Corruption culture and corporate misconduct

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  • Liu, Xiaoding

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.

Suggested Citation

  • Liu, Xiaoding, 2016. "Corruption culture and corporate misconduct," Journal of Financial Economics, Elsevier, vol. 122(2), pages 307-327.
  • Handle: RePEc:eee:jfinec:v:122:y:2016:i:2:p:307-327
    DOI: 10.1016/j.jfineco.2016.06.005
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    1. repec:spr:reaccs:v:23:y:2018:i:2:d:10.1007_s11142-017-9435-x is not listed on IDEAS
    2. repec:eee:jbfina:v:87:y:2018:i:c:p:1-25 is not listed on IDEAS
    3. repec:eee:accoun:v:52:y:2017:i:4:p:303-318 is not listed on IDEAS

    More about this item

    Keywords

    Corruption; Corporate culture; Corporate governance; Misconduct; Fraud;

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • Z1 - Other Special Topics - - Cultural Economics

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