Firms with lower disclosure on their anticorruption efforts may make more sales in corrupt countries than their high-disclosure peers, but they are likely to make less money from them, according to a new working paper from Harvard Business School.
The study examines 480 of the world’s largest companies, using ratings by Transparency International of firms’ public disclosures of strategy, policies, and management systems for combatting corruption. Professors Paul Healy and George Serafeim find that firm disclosures are related to enforcement and monitoring costs, such as home country enforcement, US listing, big four auditors, and prior enforcement actions. Disclosures also reflect industry and country corruption risks. Meanwhile the financial implications of fighting disclosure are more nuanced. Key concepts include:
Fore details, see Causes and Consequences of Firm Disclosures of Anticorruption Efforts