Corporate disclosures on curbing bribery and the UK Bribery Act 2010: evidence from UK companies

Abstract

PurposeThis study aims to investigate whether United Kingdom (UK)-based companies have changed their voluntary disclosures on curbing the bribery of foreign officials in response to the UK Bribery Act 2010, and if so whether and how such disclosure changes substantively reflected allegations of bribery of foreign officials by news media.Design/methodology/approachBy using the notions of institutional pressure and decoupling and applying content and thematic analysis, the authors examined, in particular, disclosures on curbing bribery by the largest 100 companies listed on the London Stock Exchange in periods before and after the Bribery Act (2007–2012). News media reports covering incidents of bribery of foreign officials and related corporate disclosures before and after the Act were thoroughly examined to problematise corporate anti-bribery disclosure practices.FindingsThe study finds a significant change in disclosure on curbing bribery before and after the enactment of the UK Bribery Act, consistent with the notion of institutional coercive pressure. However, decoupling is also found: organisations' disclosures did not substantively reflect incidents of bribing foreign public officials, mostly from underprivileged developing nations.Research limitations/implicationsThis study acknowledges a limitation stemming from using media reports that focus on bribery incidents in identifying actual cases or incidents of bribery. As some of the incidents identified from news media reports appeared to be allegations, not convictions for bribery, companies could have defensible reasons for not disclosing some aspects of them.Practical implicationsRegulators should think why new or more regulations without substantive requirement are not helpful to curb corporate decoupling and injustice. The regulators should address the crisis that multinational companies (MNCs) being suppliers of bribery are much more harmful for the underprivileged communities in developing nations. Accordingly, this paper provides practical insights into how stakeholders ought to critically interpret MNCs' accounts of their involvement in bribery.Originality/valueThis study contributes to the accounting literature by problematising MNCs' operations in underprivileged countries. The findings suggest that not only public officials in developing countries as creators of bribery but also Western-based MNCs as the suppliers of bribery contribute to perpetuating unethical practices and injustices to the underprivileged communities in developing countries. This research is imperative as this is one of the first known studies that provides evidence of the actions including disclosure-related actions companies have taken in response to the UK Bribery Act.

Anti-corruption disclosure quality and earnings management in the United Kingdom: the role of audit quality

“…Since anti-corruption disclosure is voluntary in most developed and emerging economies, stakeholders are increasingly demanding companies address social concerns and release more information about corruption issues. For instance, to fulfil public expectations, the UK government tends to create a strong demand for firms to report relevant corruption information (Islam et al , 2021). Furthermore, it has been argued that the level of ACD is a valid indication of the completeness and integrity of a company's strategy to fight against misconduct (Transparency International, 2009).…”

Consequences of CSR reporting regulations worldwide: a review and research agenda

“…In another study, Chauvey et al (2015) find a decrease in negative disclosures of French firms after CSR reporting regulation and conclude that, despite increasing levels of CSR disclosures over time, disclosure quality remains low. Other studies provide supporting evidence and conclude that CSR disclosures are symbolic rather substantive after the regulations in several countries (Haji and Anifowose, 2016b;Setia et al, 2015;Dong and Xu, 2016;Dumay and Hossain, 2019;Solomon and Maroun, 2012;Matuszak and R o_ za nska, 2017;Kansal et al, 2018;Cong et al, 2020;Marquis and Qian, 2013;Venturelli et al, 2020;Islam et al, 2021;Fatima et al, 2015;Peters and Romi, 2013).…”

“…Several studies conclude that changes in CSR disclosures reflect symbolic rather than substantive response to CSR reporting regulations (Birkey et al, 2018;Schwartz, 2016;Solomon and Maroun, 2012;Marquis and Qian, 2013;Kansal et al, 2018;Ruiz-Lozano et al, 2022;Mobus, 2005). Specifically, the evidence suggests that firms continue to be selective of their CSR disclosures after the regulations; and employ diverse strategies in their CSR reports ranging from use of self-laudatory tone, boilerplate language, dismissal to concealment (Setia et al, 2015;Chauvey et al, 2015;Haji, 2013;Islam et al, 2021;Criado-Jim enez et al, 2008). These conclusions are consistent with legitimacy theory and the findings in prior literature suggesting that firms provide more disclosures to respond to changing expectations without changing the underlying CSR practices or reporting quality.…”

“…Further, the effect of CSR reporting regulations on qualitative properties such as credibility, comparability and accessibility of CSR reports is also unclear (Ackers, 2017;Ioannou and Serafeim, 2017;Ottenstein et al, 2022). Specifically, early evidence suggests that firms continue to be selective of their CSR disclosures post the regulations, with a continued use of boilerplate language in CSR reports (Setia et al, 2015;Chauvey et al, 2015;Haji, 2013;Islam et al, 2021). Other studies also argue that CSR disclosures reflect symbolic rather than substantive response to CSR reporting regulations (Birkey et al, 2018;Schwartz, 2016;Solomon and Maroun, 2012;Marquis and Qian, 2013;Ruiz-Lozano et al, 2022).…”

Discretionary Accounting Narratives in Contemporary Corporate Reporting: Review and Framework

“…Table 1 summarizes some recent studies of discretionary accounting narratives focusing on antecedents to their disclosure. External antecedents include hostile takeover bids (Brennan et al, 2010), the 2008 financial crisis (Keusch et al, 2012), the UK Corporate Bribery Act 2010 (Islam et al, 2021), the legitimacy crisis at Barrack Gold's Tanzanian gold mine in the 1990s, leading to the displacement of the local community (Lauwo et al, 2020) and the unique once-in-a-100-years' COVID-19 [1] context (Brennan et al, 2022). We base our internal antecedents' exemplars on managerial retrospective sensemaking , incidents in ten companies' assembly plants affecting employees (Li & Haque, 2019) and a case company's corporate performance (Edgar et al, 2022).…”