The enduring effect of formalization on firm-level corruption in Vietnam: The mediating role of internal control

Lê, Q; Nguyen, Lien Phuong Thi; Anh, Do Vu Phuong; Duc, Anh Nguyen

doi:10.1016/j.iref.2022.06.021

Cited by 7 publications

(6 citation statements)

References 23 publications

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“…Formalization acts in a diverse way to promote revenue and pro t of small rms. One of the way is that it decreases the external pressure of being illegal as suggested by Le et al, (2022) exploring a negative correlation between formalization and bribing. Further, formalization helps to meet the nancing requirement of the small rms as formalization helps small rms to get external nancing (Le et al, 2022).…”

Section: And Conclusionmentioning

confidence: 99%

“…One of the way is that it decreases the external pressure of being illegal as suggested by Le et al, (2022) exploring a negative correlation between formalization and bribing. Further, formalization helps to meet the nancing requirement of the small rms as formalization helps small rms to get external nancing (Le et al, 2022). Further, Haruna (2023) argues that formalization promotes electricity access, usage of internet, size of rms, investment, accounting procedure, supply of product, customer coverage and competition.…”

Section: And Conclusionmentioning

confidence: 99%

“…Shamsuzzoha and Tanaka (2021) explored positive correlation between formalization and performance of manufacturing rms. Further, Le et al, (2022) examined a negative correlation between formalization and bribing. Further, Boly (2020) examined formalization of small rms on tax payment.…”

Section: Theoretical Frameworkmentioning

confidence: 99%

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Navigating Growth: A Formalized Approach to Small Firm Revenue and Profit Enhancement

Bari,

Khan,

Khan

et al. 2024

Preprint

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Governments often have strong motivation to formalize ever-growing informal firms. However, whether formalization improves the earnings of small firms is a crucial policy question. Firms chose to be formal so the impact evaluation of formalization suffers for self-selection bias. This study aims at examining the impact of the impact of formalization on revenue and profit of informal small firms using Randomized Encouragement Design. Small firms in Malawi, one of the poorest countries, are considered as the units of analysis in the present study. This study uses dataset prepared by Campos et al. (2018) who conducted Randomized Control Trial to examine different ways to formalize small firms in Malawi. Campos et al. (2023) examined the impact of Offer for cost-free business registration, coupled with a bank account opening information session as one of the treatment variables and formalization as one of the outcome variables in their study. In contrast, this study considers the offer for cost-free business registration, coupled with a bank account opening information session as an instrumental variable and formalization as the treatment variable. The result shows that formalization significantly increases revenue and profit of small firms. Heterogeneous impact analysis suggests formalization helps only manufacturing farms to earn more.

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Section: And Conclusionmentioning

confidence: 99%

Section: And Conclusionmentioning

confidence: 99%

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Navigating Growth: A Formalized Approach to Small Firm Revenue and Profit Enhancement

Bari,

Khan,

Khan

et al. 2024

Preprint

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“…Koo and Ki (2020) argue that firms with weak internal controls tend to have low ESG ratings, suggesting that robust internal control bolsters corporate sustainability. Effective internal control enhances corporate environmental protection investment (Yang et al, 2020), ensures law compliance (Le et al, 2022), and increases green levels (Li and Shen, 2021). Additionally, internal control effectively detects fraud risks that curtail improper behaviors damaging corporate reputation (Hao et al, 2018) and helps encourage managers to make shareholder-friendly decisions and to proactively fulfill social responsibilities (Liu, 2018).…”

Section: Mechanism Of Corporate Internet Control Levelsmentioning

confidence: 99%

How do smart city pilots affect the ESG performance of manufacturing firms? evidence from China

Tang,

Wang,

2024

Front. Environ. Sci.

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Introduction: The existing literature extensively covers factors influencing environmental, social, and governance (ESG) performance. However, there’s a lack of studies exploring the relationship between smart cities and ESG performance. This gap is surprising, particularly considering the significant role that governments in developing countries play in leading smart city initiatives.Methods: As the impact of smart city pilot (SCP) policies, initiated by governments, on the ESG performance of manufacturing firms lacks verification, our study leverages SCP as a quasi-experiment to examine the effects of smart city development on this performance. Data was collected from 2,229 listed manufacturing firms in China from 2009 to 2020.Results: Our findings indicate a substantial increase in ESG performance among manufacturing firms due to SCP implementation. Heterogeneity analysis reveals that the positive influence of SCP is primarily advantageous for non-state-owned enterprises. Geographically, SCP significantly enhances corporate ESG performance in eastern and central China, with more muted effects observed in the western region. Two key mechanisms driving the enhancement of corporate ESG performance due to SCP are the promotion of green innovation investment and the improvement of internal control quality.Discussion: This paper provides valuable insights for policymakers and business leaders in China and other emerging economies. It guides them in fortifying ESG performance, thereby facilitating sustainable corporate growth.

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“…Firm managers may manipulate operational and decision-making information to increase their own pay or achieve other gains, pursue unilateral expansion in scale, overinvest, and engage in excessive on-the-job spending, thus fostering corruption or rent-seeking [25,26]. The rent-seeking behavior of firms is more obvious when the internal monitoring and control mechanisms or means are not perfect [27]. We posit that the implementation of a corporate digitalization strategy will further attenuate the asymmetry of information, which in turn suppresses corporate rent-seeking.…”

Section: Introductionmentioning

confidence: 99%

Does Digitalization Strategy Affect Corporate Rent-Seeking? Evidence from Chinese-Listed Firms

Yu,

Liu

2024

Systems

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The issue of corporate rent-seeking, which stems from the misuse of authority, remains a critical concern for the international community. Drawing on agency theory and resource dependence theory, this study explores the relationship between corporate digitalization strategies (DSs) and corporate rent-seeking. We test our theoretical hypotheses by utilizing panel data encompassing Chinese A-share listed companies from 2004 to 2021. Our findings suggest that corporate DSs have a significant negative influence on rent-seeking. Several robustness tests support this conclusion. Moreover, our analysis indicates that a DS is particularly effective in curtailing rent-seeking behaviors within state-owned enterprises (SOEs) compared with their non-state-owned counterparts. However, contrary to our hypothesis, a DS is less effective in suppressing corporate rent-seeking among firms where the executive team has legal backgrounds. These findings suggest that top managers, especially within SOEs, should prioritize the early formulation of digital transformation strategies to reduce rent-seeking behavior. Additionally, when implementing digital transformation, firms should carefully integrate members with legal backgrounds into their executive teams and strengthen ethical education and supervision for executives with legal expertise.

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The enduring effect of formalization on firm-level corruption in Vietnam: The mediating role of internal control

Cited by 7 publications

References 23 publications

Navigating Growth: A Formalized Approach to Small Firm Revenue and Profit Enhancement

Navigating Growth: A Formalized Approach to Small Firm Revenue and Profit Enhancement

How do smart city pilots affect the ESG performance of manufacturing firms? evidence from China

Does Digitalization Strategy Affect Corporate Rent-Seeking? Evidence from Chinese-Listed Firms

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