This paper provides analyses of the effect of corruption in South Asia on (1) credit access for small-and medium-size enterprises (SMEs), and (2) credit constraints faced by female-owned and male-owned SMEs. By addressing potential endogeneity and reverse causality of corruption and credit constraints via instrumental variables, this study reports that corruption has a detrimental effect on credit access. Specifically, corruption increases the probability of SMEs credit constraints by 7.63%. However, gender differences emerge, indicating that bribery is slightly more effective when used by female SME owners. When male-owned SMEs pay bribes, they are on average 0.61% more credit-constrained than their counterparts. For female-owned SMEs paying bribes, they are on average 0.78% more likely to be less credit-constrained compared to female SME owners who do not pay bribes. Overall, bribery is not very effective in achieving the desired outcome and attitudes towards bribery as unethical may be more a question of culture than of gender

This study investigates the effect of paying bribes on access to credit for small, and medium enterprises (SMEs). Bribery is variously portrayed in the literature as greasing the wheel (helping) or sand in the wheel (impeding) when applying for credit leaves the issue unresolved. Using The World Bank Enterprise Surveys of SME data, an answer for India emerges using an instrumental variable probit model. SME bribery is detrimental to accessing credit and more so for firms that have been in business for many years and operating on a small scale. There are supply and demand side forces involved, culminating in differing size effect reactions. From a supply side perspective, when corruption is high, financial institutions find it harder to control borrower risk and recover loans. In that case, financial institutions reduce their lending to SMEs, which mostly belong to a high-risk category. Unlike large firms, SMEs paying bribes to grease the wheel are drawn to the informal sector, avoiding attention from officials. Where SMEs pay bribes in the formal sector it is noticed and is likely to increase the probability that other parties will also demand payments. The demand side argument regards bribes as a tax, increasing the cost of loans to the SMEs. Consequently, making significant bribes decreases these SMEs' profitability. Less profitable SMEs may not obtain access to credit. From a policy perspective, anti-corruption measures are vital for developing SMEs. Generalising these findings to other emerging economies suggests potentially significant welfare gains.

We argue here that being negative can, in certain contexts, make strategic sense. Making extensive reference to context, we analyze a single annual executive letter written by the director of a small New Zealand business. The letter appears to focus on problems. These problems are, however, relatively minor ones that had either already been solved or were in the process of resolution when the letter was written. These problems appear to serve three functions: to distract attention from more serious issues, to undermine the credibility of potential challengers, and to provide a context in which the writer can present himself and the other company directors positively as problem solvers. The writer's immediate objective appears to have been achieved: The business of the annual general meeting was conducted in eleven minutes, and each resolution was carried without amendment. The status quo was maintained. Focusing on negatives may, however, have proved to be a high-risk strategy in the longer term. Recent communications from the director to stockholders reveal that he is having difficulty in sustaining at least one of the positions he adopted in his executive letter.

In their efforts to assist accountability for small and medium-sized enterprises globally, the International Accounting Standards Board issued the Exposure Draft: International Financial Reporting Standards for Small and Medium sized Enterprises (IFRS for SMEs) in 2007. Three countries from the Association of South East Asian Nations (ASEAN) are amongst the 66 jurisdictions to state they would adopt the IFRS for SMEs. This paper critically examines the forces driving adoption, participation of stakeholders in the processes of development of the IFRS for SMEs, implementation issues and possible dysfunctional consequences for entrepreneurs in developing countries. We question the suitability of the IFRS for SMEs for adoption, particularly by the developing economies within ASEAN.We find the one-size-fits-all-standard for SMEs, with a capital markets orientation, does not accommodate well the differing cultures, ways of doing business, regulatory frameworks, underlying philosophies, or needs of users of financial reports from SMEs. We conclude that adoption without modifications or exemptions would provide few benefits for SMEs in emerging economies; rather it would be burdensome to entrepreneurs and inappropriate for achieving national economic growth targets. Imposition of the IFRS for SMEs may inadvertently result in reduced entrepreneurship activity in response to onerous financial reporting requirements. We suggest that investment in the business infrastructure is a priority. Further, in-depth research should be undertaken, in each jurisdiction before adoption of the IFRS for SMEs, on the challenges that are likely to be faced in implementing the standard. Our paper contributes to the discussion on the adoption and implementation of the internationalization of accounting standards.

This paper contributes to the discussion on the International Financial Reporting Standard for Small and Medium-sized Enterprises (IFRS for SMEs) in the academic literature by examining the political economy of convergence, and illuminating the processes used by the International Accounting Standards Board (IASB) to achieve convergence and participation by developing economies. The IFRS for SMEs was developed to facilitate implementation of a two-tier reporting regime in the developing economies. Since 2000, progress towards issuance of the IFRS for SMEs has been hindered by a lack of active engagement by SMEs and academics from developing economies. It is found that (1) a lack of grounded studies and empirical knowledge on SME users' needs impeded the development of the IFRS for SMEs; (2) the capital market assumption adopted for the IFRS is clearly inappropriate; and (3) the under-representation of developing economies in international standard setting remains an issue. It is recommended that the IASB ascertains the users of SME reports and their needs and then develops a coherent conceptual framework for SMEs (particularly those from developing economies).The IASB needs to take into consideration the needs, culture and regulatory infrastructures of the developing economies, the political agendas of the standard-setting stakeholders, and barriers to implementation.