Corruption and corporate risk-taking: evidence from emerging markets

Trần, Quốc Trung

doi:10.1108/ijoem-08-2019-0602

Cited by 25 publications

(21 citation statements)

References 60 publications

(118 reference statements)

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“…First, this corresponds with the weak IPR protection we identified in the factor analysis. It is also consistent with Tran [ 53 ] in that corruption increases the operating and debt financing costs of enterprises and reduces their risk-taking. In fact, by reducing market costs and improving technical income, a higher IPR protection level in the urban context is conducive for foreigners to purchase more shares from local enterprises or to invest directly [ 54 ].…”

Section: Resultssupporting

confidence: 89%

Does a smart business environment promote corporate investment? a case study of Hangzhou

2022

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As a result of business environment reforms in China’s Hangzou, the cost of business has reduced, the confidence of Hangzhou enterprises has survived the COVID-19 outbreak, and foreign investment continues to increase. Nevertheless, Hangzhou’s business environment has shortcomings, such as insufficient technology, talent, and intelligent infrastructure. Two unresolved questions persist: (i) Has the smart business environment stimulated corporate investment by reducing system costs and boosting corporate confidence? (ii) How do the commercial climate’s shortcomings impact the relationship between the intelligent business environment and business costs/confidence? We examined the impact of a local smart business environment on the corporate investment scale in Hangzhou using factor analysis, cluster analysis, linear regression, and path analyses of data from 297 firm managers. Smart governance improved public administration, financing, and rule of law. The business environment promoted investment by increasing business confidence and decreasing institutional costs. Weak intelligent property protection and legal fairness hindered the positive influence of smart governance on business confidence and system costs. This is the first study combining business environment, smart city, and smart governance concepts to analyze the influence of local smart business environments on business confidence, institutional costs, and investment. Our conclusion on the limitation effect of intelligent business environment on enterprise investment attempts to inspire further research on the intersection of business environments and smart cities. The law of intelligent business environment attracting investment obtained in the context of China, the largest developing country with diversified economic development, is of great significance for other developing countries. Countries can attract investment and promote economic development through intelligent governance. Developing countries should construct smart service platforms, coordinate supervision of public credit, reduce financing constraint, construct a government under the rule of law, improve the quality of land management, and protect intellectual property rights.

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Section: Resultssupporting

confidence: 89%

Does a smart business environment promote corporate investment? a case study of Hangzhou

2022

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“…First, this corresponds with the weak IPR protection we identified in the factor analysis. It is also consistent with Tran [53] in that corruption increases the operating and debt financing costs of enterprises and reduces their risk-taking. In fact, by reducing market costs and improving technical income, a higher IPR protection level in the urban context is conducive for foreigners to purchase more shares from local enterprises or to invest directly [54].…”

Section: Linear Regressionsupporting

confidence: 80%

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“…, 2015b; Tahir et al. , 2020; Thakur and Kannadhasan, 2019; Tran, 2019, 2020a, b). However, its weakness is the incomparability in its calculation methodology.…”

Section: Data Sourcementioning

confidence: 99%

“…, 2020; Tran, 2019), capital structure (Singh and Kannadhasan, 2020), corporate risk-taking (Chen et al. , 2015b; Tran, 2020b), firm growth (Nguyen and Van Dijk, 2012) and investment growth (Asiedu and Freeman, 2009). However, they have not fully addressed how corruption determines corporate investment efficiency.…”

Section: Introductionmentioning

confidence: 99%

“…This paper makes two contributions to the literature. First, prior studies document that corruption affects corporate financial decisions, such as cash holdings (Thakur and Kannadhasan, 2019;Tran, 2020a), dividend policy (Tahir et al, 2020;Tran, 2019), capital structure (Singh and Kannadhasan, 2020), corporate risk-taking (Chen et al, 2015b;Tran, 2020b), firm growth (Nguyen and Van Dijk, 2012) and investment growth (Asiedu and Freeman, 2009). However, they have not fully addressed how corruption determines corporate investment efficiency.…”

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Corruption and corporate investment efficiency around the world

Nguyen

Trần

2022

EJMBE

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PurposeThe paper investigates the effect of corruption on corporate investment efficiency around the world.Design/methodology/approachThe sample includes 218,350 observations from 30,074 firms across 42 countries. The authors measure corruption based on the Corruption Perception Index (CPI) from Transparency International, Corruption Control Index (CCI) from the World Bank and Corruption Index from the International Country Risk Guide.FindingsThe authors find that corruption is negatively related to investment efficiency. The robustness checks with different measures of corporate investment and alternative regression approaches show consistent findings. Moreover, the authors also find that the effect of corruption is stronger (weaker) in strong (weak) shareholder protection countries.Originality/valueThe paper has two important contributions to the literature. First, it shows that corruption environment is also a determinant of corporate investment efficiency. Second, legal protection of shareholders can mitigate the negative effect of corruption on corporate investment efficiency.

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Corruption and corporate risk-taking: evidence from emerging markets

Cited by 25 publications

References 60 publications

Does a smart business environment promote corporate investment? a case study of Hangzhou

Does a smart business environment promote corporate investment? a case study of Hangzhou

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Corruption and corporate investment efficiency around the world

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