Economic uncertainty and corruption: Evidence from public and private firms

Mansoor Afzali; Gonul Colak; Mengchuan Fu

doi:10.1016/j.jfs.2021.100936

Economic uncertainty and corruption: Evidence from public and private firms

Mansoor Afzali, Gonul Colak^*, Mengchuan Fu

^*Corresponding author for this work

Research output: Contribution to journal › Article › Scientific › peer-review

9 Citations (Scopus)

Abstract

We study the influence of policy uncertainty on the moral behavior of firms. When facing uncertainty, managers perceive various socioeconomic obstacles as more severe and disruptive to their business. Using data from policy uncertainty spouts in 93 countries, we document that some firms engage in norm-deviant behavior by cheating on taxes and paying more bribes. While private firms prefer to cheat on taxes, public firms choose bribery as a favorite tool to “grease the wheels” during periods of uncertainty. Strong social capital (local trust and religiosity) breaks this link between uncertainty and corruption.

Original language	English
Article number	100936
Peer-reviewed scientific journal	Journal of Financial Stability
Volume	57
Number of pages	21
ISSN	1572-3089
DOIs	https://doi.org/10.1016/j.jfs.2021.100936
Publication status	Published - 01.12.2021
MoE publication type	A1 Journal article - refereed

Keywords

511 Economics
corruption
trust
517 Political science
economic policy uncertainty
private firms
corruption
bribery
cheating on taxes
trust
religiosity

Areas of Strength and Areas of High Potential (AoS and AoHP)

AoS: Financial management, accounting, and governance

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

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KW - trust

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KW - religiosity

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Economic uncertainty and corruption: Evidence from public and private firms

Abstract

Keywords

Areas of Strength and Areas of High Potential (AoS and AoHP)

UN SDGs

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