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Impact of Country Governance and Financial Development on Corporate Fraud Cases: A Cross Country Perspective

Author

Listed:
  • Muhammad Subhan

    (Islamia College University Peshawar, Department Management Sciences, Pakistan)

  • Tofail Ahmed

    (Islamia College University Peshawar, Department Management Sciences, Pakistan)

  • Wali Ullah

    (Islamia College University Peshawar, Department Management Sciences, Pakistan)

  • Dr. Hamid Ullah

    (Assistant professor, Islamia College University Peshawar, Department Management Sciences, Pakistan)

  • Dr. Shahid Jan

    (Associate Professor, Islamia college university Peshawar, department management sciences, Pakistan)

Abstract

This study aims to examine the impact of country governance and financial development on corporate fraud cases across countries' perspectives from the year 2012-2018 by using country- wise data. This study runs different statistical models like descriptive, correlations, Random effect model, fixed effect model. This study chooses a fixed effect model based on the Hausman test and used Quantile regression for robustness and interquartile 0.25 to 0.75 difference regression models to find out the difference that the effect of variables are significant or insignificant at different quartile. The results of the different models show that country governance having a significant impact on corporate fraud cases and the association is negative thus improvement in country governance would expectedly reduce the corporate fraud cases. while financial development in terms of the financial market has a significant impact on corporate fraud cases and association is positive thus the development of a financial market where different financial products and instruments with less knowledge have the probability to be easily used for fraud. whereas financial development in terms of financial institutions having a significant effect on corporate fraud cases and the relationship is negative thus improvement in financial institutions like the security exchange commission of Pakistan and state bank would certainly minimize the corporate fraud cases.

Suggested Citation

  • Muhammad Subhan & Tofail Ahmed & Wali Ullah & Dr. Hamid Ullah & Dr. Shahid Jan, 2024. "Impact of Country Governance and Financial Development on Corporate Fraud Cases: A Cross Country Perspective," Bulletin of Business and Economics (BBE), Research Foundation for Humanity (RFH), vol. 13(2), pages 487-504.
    • Handle: RePEc:rfh:bbejor:v:13:y:2024:i:2:p:487-504
    DOI: https://doi.org/10.61506/01.00359
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    References listed on IDEAS

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    1. Jesse A Ellis & Sara B Moeller & Frederik P Schlingemann & René M Stulz, 2017. "Portable country governance and cross-border acquisitions," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 48(2), pages 148-173, February.
    2. P. K. Gupta & Sanjeev Gupta, 2015. "Corporate frauds in India – perceptions and emerging issues," Journal of Financial Crime, Emerald Group Publishing Limited, vol. 22(1), pages 79-103, January.
    3. Mariassunta Giannetti & Tracy Yue Wang, 2016. "Corporate Scandals and Household Stock Market Participation," Journal of Finance, American Finance Association, vol. 71(6), pages 2591-2636, December.
    4. Rabeea Sadaf & Judit Oláh & József Popp & Domicián Máté, 2018. "An Investigation of the Influence of the Worldwide Governance and Competitiveness on Accounting Fraud Cases: A Cross-Country Perspective," Sustainability, MDPI, vol. 10(3), pages 1-11, February.
    5. Tracy Yue Wang & Andrew Winton & Xiaoyun Yu, 2010. "Corporate Fraud and Business Conditions: Evidence from IPOs," Journal of Finance, American Finance Association, vol. 65(6), pages 2255-2292, December.
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