Perceived corruption in business environment: exploring the underlying causes

Abstract

This paper presents an empirical contribution to the literature that tends to explain variations in corruption perceptions. Drawing on theoretical assumptions about the impact of corruption on the quality of the business environment, we explore possible determinants of perceived corruption. We argue that explaining the determinants of corruption perceptions could be a valuable input for creating effective anti-corruption policies. In the paper, we perform a detailed analysis on the case of Serbia, a transition country with relatively widespread corruption in the business environment. Using the non-parametric analysis of variance test, we examine the signifi cance of differences in the perceived spread of corruption across a number of independent variables (regions, size of locality, industry, size, and years of operation). Specifying an ordered logistic regression model, we estimate the relation between corruption perceptions and a number of potential causes: frequencies of unoffi cial payments or gifts for different purposes, the impact that unoffi cial payments to public offi cials have on the business operations of the respondents, as well as attitudes of the respondents about the quality of the judicial system and political stability. We fi nd that perceptions of corruption as an obstacle to business operations can be linked to the frequency of unoffi cial payments to deal with customs and taxes, as well as the impact of unoffi cial payments to local or regional government offi cials on business performance of the respondents. The results provide useful insights into what policy measures are necessary to reduce the level of corruption, as well as how the effects of such measures can be assessed.

Perceptions of Corruption and Informality Among Businesspeople

“…Another study on the bribery demands as experienced by the Serbian entrepreneurs in relation to public officials revealed that bribery of civil servants was omnipresent, and even viewed as an additional tax in every business undertaking (Vuković 2002). Relatedly, there is evidence of the importance of the institutional environment when doing business (Džunić and Golubović 2018;Dreher, Kotsogiannis and McCorriston 2009;Djankov et al 2002). In a survey on the effects of corruption on the South East European Journal of Economics and Business, Volume 17 (2) 2022 establishment of new businesses in Serbia, the respondents were the owners of SMEs, and 60% of them admitted to engaging in corrupt behaviors when starting a business (Ivanović-Djukić et al 2019).…”

Data mining and bifurcation analysis of the risk of money laundering with the involvement of financial institutions

“…Despite the fact that the correlation coefficient between happiness score and corruption perceptions index indicates a tight link, it is reasonable not to consider both indicators in terms of economic theory. Thus, the relevance of entering the corruption perceptions index into the final data set is explained by the fact that corruption is the basis for any money laundering scheme since it minimizes control actions, possible resistance and complications of financial transactions (Džunić & Golubović, 2018;Mujtaba et al, 2018). The spread of corruption in all spheres of activity of business entities and government agencies helps to minimize the risk of exposing fraudulent transactions (Remeikienė et al, 2018).…”

Mining Risk-Related Sentiment in Corporate Annual Reports and Its Effect on Financial Performance

“…However, the identification and potential effects of risk events on corporate financial performance have not been dealt with. This is attributed to the complexity of this task (Salameh & Bashir, 2013;Bunget et al, 2014), which arises from the fact that business sustainability is assessed not only in terms of efficient use of resources and procedures (operational efficiency is reflected in corporate financial performance, see Marc et al, 2018) and in the growth of share value (Guenster et al, 2011;Cai & He, 2014), but also that the firm's performance is also assessed in relation to the quality of business environment (Džunić & Golubović, 2018), often with positive impacts of CSR (Manzoor et al, 2019) and environmental protection practices (Flammer, 2013;Fuente et al, 2016;Chen et al, 2017;Kumar et al, 2017;Myskova & Hajek, 2018).…”