Corporate disclosure on anti-corruption practice. A study of social responsible companies in the Gulf Cooperation Council

Author:Ayman Issa, Antonio Alleyne
Position:Department of Accounting, Dongbei University of Finance and Economics, Dalian, China
Pages:1077-1093
SUMMARY

Purpose This paper aims to determine the extent of anti-corruption information disclosure in the sustainability reports originating from Gulf countries. Design/methodology/approach This study utilizes a deeply rooted content analysis technique of corporate sustainability reporting, covering 66 Gulf Cooperation Council (GCC) firms during 2014. Findings Strengthened by the ... (see full summary)

 
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Corporate disclosure on
anti-corruption practice
A study of social responsible companies in the
Gulf Cooperation Council
Ayman Issa
Department of Accounting, Dongbei University of Finance and Economics,
Dalian, China, and
Antonio Alleyne
Dongbei University of Finance and Economics, Dalian, China
Abstract
Purpose This paper aims to determine the extent of anti-corruption information disclosure in the
sustainabilityreports originating from Gulf countries.
Design/methodology/approach This study utilizes a deeply rooted content analysis technique of
corporatesustainability reporting, covering 66 Gulf Cooperation Council(GCC) rms during 2014.
Findings Strengthened by the application of the institutional theory, insight into the results points to a
state of limited maturity regarding the disclosure of anti-corruption procedures in the region. More
specically,the results highlight the compliance in the reporting of conduct code, while reportinginformation
on whistleblowingwas signicantly less in comparison. Firms in Qatar and the UAE ultimatelyrelease better
informedreports, inclusive of detailed informationon internalanti-corruption practices.
Originality/value The aim of this study is to determine the extent of sustainability reporting in GCC
companies under coercive isomorphism concept, with a special interest in the disclosure of anti-corruption
practices. Ultimately, addressingthe following questions: To what extent the GCC companies disclose their
anti-corruption practices in the sustainability reports? What areas of anti-corruption disclosure the GCC is
more concernedin their sustainability reports? To what extentdo external forces under coercive isomorphism
explain the extentof anti-corruption?
Keywords Arabian Gulf, GCC, Sustainability report, Anti-corruption disclosure
Paper type Research paper
1. Introduction
Across the business community, corruption remains a monumental challenge, particularly
within developing nations. Corporate corruption has been known to undermine economic
development, corrode civil society and diminish democratic accountability. Corroborated
by the numerous internationally criminalized corporate scandals over the previous decade,
awareness of this issue continues to rise, albeit at uneven rates (Eiris, 2005). Recent
scandals of Xerox, Enron, WorldCom and Lehman Brothers have forced the attention of
policy makers and governments toward the development of more restrictive anti-
corruption policies. According to United Nations Global Compact (2006), corruption has
been recognized as one of the worlds greatest challenges. Corrupt practices have been
known to ultimately rob the already disadvantage population, diverting resources for
essential services (education, clean water and health care) into the purses of corrupt
ofcials (Hills et al., 2009).
Corporate
disclosure
1077
Journalof Financial Crime
Vol.25 No. 4, 2018
pp. 1077-1093
© Emerald Publishing Limited
1359-0790
DOI 10.1108/JFC-05-2017-0045
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/1359-0790.htm
Through the literature, various denitionshave been used to explain such acts of greed.
However, throughout this analysis, the explanation putforward by Argandoña (2005) with
the point of referenceregarding corruption:
The act or eect of giving or receiving a thing of value, in order that a person do or omit to do
something,inviolation ofaformalorimplicitruleaboutwhatthatpersonoughttodooromitto
do, to the benet of the person who gives the thing of value or a third party (Argandoña, 2005,
p. 252).
Representing a major social issue around theworld, corruption is any misuse of power and
position for private gainwhile damaging the organizational integrity (United Nations Global
Compact, 2006). Through acts of bribery, overestimated project budgets, legal and/or other
expenses, corruptionis estimated to incur a global cost of US$2.6tn. As a result, corporations
are constantly encouraged to avoid all forms of corrupt practices, to maximize operational
efciency and maintain a good social reputation. That is, increase anti-corruption practices
through a strategic lens focused on corporate social responsibility (CSR) (Hills et al.,2009).
The harmful effects of corruption are incompatible with sustainable development. Branco
and Matos (2016), thus, argue that the prevention of corruption is an integral part of any
organizationsCSR.
Anti-corruption activities are provided under the social category in sustainability
reporting guidelines Global Reporting Initiative (GRI) guidelines. According to the
guidelines for 2014, an organizations sustainability report should include anti-corruption
policiesand procedures implemented in the organization trainingprogram on anti-corruption
practices,as well as the total number of operationsused to assess corruption-relatedrisks.
Organizations should report any incidents of corruption and the actions taken.
Sustainability reporting guidelines are commonly based on three pillars: economic,
environmental and social. This report conveys information related to an organizations
impact (positive or negative) on the environment, society and the economy. The guidelines
further assert the adoption of robust corporate governance system that counters nancial
statementfraud, corruption and money laundering activities.Good corporate governance has
been identied as an important way to curtail such activities. Firms, posited by Rose-
Ackerman and Truex (2 012), needto push toward a self-fullling cycleof good governance to
promote the efcacy of anti-corruption practices. Osuagwu (2012) adds that governance
system designed to ght corruption should be b uilt to reach eff ectiveness and i mprove
performance.
Currently, laws whichexist within the Gulf Cooperation Council (GCC) countriesprohibit
any acts of bribery. The violation of these laws are accompanied by criminal nes and or
periods of imprisonmentfor both parties involved; those who offer the bribe and for the local
ofcial receiving. Gifts in any form, hospitality or entertainment can constitute a bride and
therefore forbidden under the laws of the GCC states, if inuential to an ofcials decisions
(Jones Day, 2013). The Corruption Perceptions Index (CPI) published on an annual basis by
Transparency International (TI), in 2015, ranks all GCC states. A review of this index
reveals that Qatar andthe UAE both enjoy better rankings compared with other GCCstates.
Qatar was labeled the least corrupt country, ranking22
nd
on a global scale, followed by the
UAE, Saudi Arabia, Bahrain, Kuwait and Oman have CPI ranking of 23, 48, 50, 55 and 60,
respectively.
Heightened by this ranking, the aim of this study is to determine the extent of
sustainability reporting in GCC companies under coercive isomorphism concept, with a
special interest in the disclosure of anti-corruption practices. Ultimately, addressing the
following questions:
JFC
25,4
1078

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