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The Impact of Anti-Corruption Policies on the Profitability and Growth of Firms Listed in the Stock Market: Application on Singapore with a Panel Data Analysis

Author

Listed:
  • Ahmed Badawi
  • Anas AlQudah

    (Independent Senior Economist, Saudi Arabia
    University of Abu Dhabi, United Arab Emirates)

Abstract

The study measures the impact of anti-corruption policies on the profitability and growth of firms listed in the Singapore Stock Exchange (SGX). It is the first paper that investigates the impact of macro and micro economics variable together. The study uses panel data regression to examine the effect of corruption on firm profitability and growth in 392 listed firms in Singapore Stock Exchange for the period from 1995 to 2014. We used 2 models; in the first model we measure the relation between corruption and profitability measured by net profit margin. In this model we run 2 sub- models; in the first one we added only micro-variables to corruption and in the second we incorporated macro-and micro-variables together. Moreover, in the second model we measure the relation between corruption and company growth measured by total asset growth. In this model we run 2 sub- models; in the first one we added only micro-variables to corruption and in the second we incorporated macro- and micro- variables together. All data are coming from DataStream database except the corruption index which comes from the transparency international index (CPI) The main conclusion of this study is that anti-corruption policies that was conducted in Singapore over the period from 1995 to 2014 resulted in better firm performance measured by net profit margin (1-point index improvement increases net profit margin by about 12.8%) and asset growth (1-point index improvement increases total asset growth by about 11.7%). Since this result might not be generalized in all countries with different level of growth, further research is suggested to investigate the factors that differentiate the anti-corruption policy effect among different countries including national culture that may impacts the fanatical system.

Suggested Citation

  • Ahmed Badawi & Anas AlQudah, 2019. "The Impact of Anti-Corruption Policies on the Profitability and Growth of Firms Listed in the Stock Market: Application on Singapore with a Panel Data Analysis," Journal of Developing Areas, Tennessee State University, College of Business, vol. 53(1), pages 179-190, January-M.
    • Handle: RePEc:jda:journl:vol.53:year:2019:issue2:pp:178-204
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    Citations

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    Cited by:

    1. Shiwei Xu & Mingzhe Qiao & Bin Che & Peng Tong, 2019. "Regional Anti-Corruption and CSR Disclosure in a Transition Economy: The Contingent Effects of Ownership and Political Connection," Sustainability, MDPI, vol. 11(9), pages 1-14, April.
    2. Alice Medioli & Pier Luigi Marchini & Tatiana Mazza, 2024. "The impact of corruption and public governance quality on family firm business strategy," Business Strategy and the Environment, Wiley Blackwell, vol. 33(1), pages 55-69, January.
    3. Brzić, Barbara & Dabić, Marina & Kukura, Frane & Podobnik, Boris, 2021. "The effects of corruption and the fraction of private ownership on the productivity of telecommunication companies," Technology in Society, Elsevier, vol. 65(C).

    More about this item

    Keywords

    Corruption; Firm Profitability; Firm Growth and Panel Data;
    All these keywords.

    JEL classification:

    • C00 - Mathematical and Quantitative Methods - - General - - - General
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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