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Determinants Of Defence Industry Corruption Risk: Firm Level Empirical Evidence Using Transparency International’S Anti-Corruption Index

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  • CHANDRASEKHAR KRISHNAMURTI

    (School of Commerce, University of Southern Queensland, Toowoomba QLD, 4350, Australia)

  • DOMENICO PENSIERO

    (School of Commerce, University of Southern Queensland, Toowoomba QLD, 4350, Australia)

  • ESWARAN VELAYUTHAM

    (School of Commerce, University of Southern Queensland, Toowoomba QLD, 4350, Australia)

Abstract

Since there is a general perception that the defence industry is more susceptible to corruption compared to other sectors, using a unique database provided by Transparency International (TI), we examine the role of firm level antecedents on firm level corruption risk in the defence industry. We find that larger firms have lower levels of firm level corruption risk. Managerial shareholding is associated with higher levels of corruption risk. Firms that voluntarily disclose more information regarding their corruption control systems tend to have lower levels of corruption risk. Finally, listed firms also have lower levels of firm level corruption risk. We find that the “listing effect” is stronger among firms in financially developed countries ostensibly due to the better scrutiny and monitoring by market participants. In our analysis, we control for country level variables such as a composite index of government effectiveness in controlling defence industry corruption.

Suggested Citation

  • Chandrasekhar Krishnamurti & Domenico Pensiero & Eswaran Velayutham, 2019. "Determinants Of Defence Industry Corruption Risk: Firm Level Empirical Evidence Using Transparency International’S Anti-Corruption Index," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 64(03), pages 675-708, June.
    • Handle: RePEc:wsi:serxxx:v:64:y:2019:i:03:n:s0217590816500053
    DOI: 10.1142/S0217590816500053
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    2. Banerjee, Rajabrata & Gupta, Kartick & Krishnamurti, Chandrasekhar, 2022. "Does corrupt practice increase the implied cost of equity?," Journal of Corporate Finance, Elsevier, vol. 73(C).

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