Corruption, governance, and public pension funds

Zhang, Hongxian; Guo, Liang; Hao, Maggie

doi:10.1007/s11156-017-0691-4

Cited by 6 publications

(8 citation statements)

References 39 publications

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“…Wallace and Latcheva (2006) show a similar phenomenon of institutional corruption from post-Communist countries but call it a “formal dimension of monetized/non-monetized activities,” separate and distinct from household and individual experiences and activities. Closest to our study, Andonov et al (2018) and H. Zhang et al (2017) present empirical evidence that pension fund investment underperformance is affected significantly and substantively through an (institutional or contextual) corruption channel.…”

Section: Corruption Public Finances and Financial Risksmentioning

confidence: 71%

“…However, contexts with relatively greater levels of public corruption are likely to overlook such concerns and award the management of funds to less than competent firms. Research also shows that pension fund managers and public officials receive bribes from investment firms and placement agents, for example, which tends to result in low performing and biased investment decisions (Hochberg & Rauh, 2013; H. Zhang et al, 2017).…”

Section: Conceptual Framework and Formal Hypothesesmentioning

confidence: 99%

“…Existing studies offer evidence of a mix of factors—generously defined pension benefit promises, poor actuarial estimates of retiree behavior and longevity, manipulations of accounting practices, excessive estimates of what pension fund balances could earn, and failure to make the necessary annual payments into the pension fund to support future benefits (Chen, 2018; Chen et al, 2015; Coggburn & Kearney, 2010; Novy-Marx & Rauh, 2011; Stalebrink, 2014). Because these factors may be manipulated by public officials for institutional and for private financial gain, it is useful to consider whether contexts with public corruption are at play and, hence, potentially exacerbate the underfunding of state pension plans (Andonov et al, 2018; H. Zhang et al, 2017).…”

Section: Introductionmentioning

confidence: 99%

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Public Corruption and Pension Underfunding in the American States

Liu¹,

Mikesell

Moldogaziev

2021

The American Review of Public Administration

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Unfunded public pension obligations represent a great challenge for policy makers in the American states. We posit that a part of pension underfunding relates to the level of public corruption. Empirical findings in the article show that funding ratios in public pension funds are inversely related to the incidence levels of corruption in the state, with other fiscal, political, and institutional covariates held constant. We show that this can happen through higher pension benefits, lower actuarially required contributions (ARCs), lower percentage of actual ARC contributions, and poorer investment outcomes. Based on empirical estimates, we find that a reduction of corruption by one standard deviation around the mean would permit the states to save on pension benefits by 10.24% annually (or US$1,894.64 per recipient), increase required ARC by 4.40%, increase actual ARC contributions by 8.46%, and improve investment returns by 4.72%. Therefore, policies to reduce public-sector corruption, or to improve the insulation of pension funds in relatively more corrupt environments, can make a significant contribution toward tackling the public pension underfunding crisis in the American states.

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Section: Corruption Public Finances and Financial Risksmentioning

confidence: 71%

Section: Conceptual Framework and Formal Hypothesesmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Public Corruption and Pension Underfunding in the American States

Liu¹,

Mikesell

Moldogaziev

2021

The American Review of Public Administration

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“…Existing evidence reveals the extensive prevalence of corruption in international business settings (Islam et al, 2018; Qi et al, 2020). It is not confined solely to developing nations or limited to political or economic systems but rather ubiquitously and permanently (Changwony & Paterson, 2019; Donadelli et al, 2014; Mazzi et al, 2018, 2019; Reichborn‐Kjennerud et al, 2019; Zeume, 2017; Zhang et al, 2018). The leak of the FinCEN files in September 2020, alongside notable corporate scandals in the United States and Europe, serves as a testament to this reality (Watson & Hirsch, 2010; Wu, 2005).…”

Section: Introductionmentioning

confidence: 99%

“…Therefore, it is considered a major impediment to social, political, and economic progress (Branco & Delgado, 2012; Hills et al, 2009; Nguyen & Van Dijk, 2012; Reichborn‐Kjennerud et al, 2019). From a business perspective, corruption results in increased operational costs, fines, penalties, damage to reputation, competitive disadvantages, and declining productivity (Cardoni et al, 2020; Donadelli et al, 2014; Islam et al, 2018; Luo, 2005; Watson & Hirsch, 2010; Zhang et al, 2018). The profound impact of corruption underscores the urgent need to combat it.…”

Section: Introductionmentioning

confidence: 99%

What drives firms' commitment to fighting corruption? Evidence from the UK

Sarhan,

Al‐Najjar

2023

Financ Manag Account

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The recent leak of the FinCEN files has highlighted the widespread presence of corruption in developing and developed economies, including the UK. Accordingly, this study aims to investigate the factors that drive companies to implement measures for preventing corruption in developed countries using FTSE 350 nonfinancial firms. Specifically, the research examines the influence of corporate social responsibility (CSR) commitments, board structure, and shareholding structure on adopting strategies, policies, and procedures aimed at countering corruption. Drawing upon agency, stakeholder, and legitimacy theories, our empirical evidence supports that CSR commitments and board independence positively influence firms' engagement in anticorruption measures. Conversely, institutional and managerial shareholdings are found to have a negative association with firms' efforts to combat corruption. In addition, the study shows that the effect of board characteristics became more pronounced following the enactment of the UK Bribery Act 2010, indicating risk‐averse behavior. Various models, including cross‐sectional and two‐stage least squares (2SLS), are employed to analyze the data. Our findings have significant implications for understanding the complex relationship between CSR, corporate governance, and the ethical infrastructure of organizations. Ultimately, our results provide valuable insights for policymakers, companies, and other stakeholders in developing effective strategies, policies, and procedures to combat corruption activities.

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Silent but deadly: Political corruption and voluntary ESG disclosure in the United States

Hoang

2022

Manage Decis Econ

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This paper investigates the impacts of political corruption and carbon risk on corporate Environmental, Social, and Governance (ESG) disclosure. As there has not been a law to enforce ESG disclosure in the United States, ESG disclosure remains on a voluntary basis regardless of the growing attention from market participants and society. Using a sample of US listed firms and state‐level corruption data during 2005–2018, the study shows that political corruption affects voluntary ESG disclosure. The empirical results reveal that heavy‐polluter firms benefit from local corruption and less likely to voluntarily disclose their ESG performance compared to their counterparts.

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Corruption, governance, and public pension funds

Cited by 6 publications

References 39 publications

Public Corruption and Pension Underfunding in the American States

Public Corruption and Pension Underfunding in the American States

What drives firms' commitment to fighting corruption? Evidence from the UK

Silent but deadly: Political corruption and voluntary ESG disclosure in the United States

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