Does corruption in the public sector reduce corporate ethics? – a panel data analysis

Ferreira, Fernanda A.; Castro, Conceição; Lopes, Isabel Cristina

http://hdl.handle.net/10400.22/15102

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Authors

Ferreira, Fernanda A.

Castro, Conceição

Lopes, Isabel Cristina

Abstract(s)

In a globalized world, organizations no longer operate at a national level, which poses challenges for corporate ethics standards. Ethics has gained importance in this competitive business environment. In addition, enterprises face different levels of government ethics and political systems in which they operate and when they face high levels of corruption in the public sector this may lower the standard for corporate ethics. Using regression models for panel-data, the aim of this paper is to assess the effects of corruption in the public sector on corporate ethics, in a sample of 127 countries over the period of 2006–2017. The results suggest that there is a significant and negative impact of corruption in the public sector on the ethical behavior of firms. In addition, regulatory quality, corporate accountability and internet usage have significant and positive impacts on corporate ethics. This implies that fighting public corruption, promoting the development of policies that are market-friendly, strengthening the standards of auditing and reporting, and increasing the degree of digitalization of a country can improve the ethical behavior of firms.