The Determinants Of Managerial Corruption And Its Effect On Firm’s Performance

In the beginning of this century，With the exposure of Enron, WorldCom and otherwell-known corporate governance scandals， people began to realize that does exist to acertain extent the problem of corruption of corporate executives in China’s state-ownedenterprises, and also gradually became aware of the serious harm of corruption ofcorporate executives. But the existing corruption research is focused on the corruption ofgovernment officials, and little attention to the managerial corruption. And one of the fewcorporate managerial corruption literature is more focused on descriptive analysis of therare in-depth analysis of the mechanism of the corrupt behavior of corporate executives.For managerial corruption, or stay in the moral condemnation, or stop at strengthening thelegal and regulatory and policy recommendations. It is true, the improvement of the legaland regulatory system is indeed an important aspect to curb corruption, but when themanagerial corruption may be a group behavior, it is necessary to further investigate theunderlying causes behind, that is, whether there are systemic predisposing factors.For this reason, this paper attempts a systematic review and combing corruptionresearch literature on the existing corporate executives, from the environmental point ofview of the decentralization reform in China. And manually collect the relevant data ofthe managerial corruption of listed companies, using logistic regression methods forinvestigating the managerial corrupt influencing factors as well as the impact on businessperformance. The study found that:①managerial powers and managerial corruption ispositively correlated. Managerial power intensity increases, the greater the likelihood ofmanagerial corruption.②Enterprises where the degree of market play an inhibitoryeffect on managerial corruption. The lower the degree of market area, the more seriousthe managerial corruption.③Compensation control increase the probability ofoccurrence of managerial corruption.④Board independence and managerial corruptionis negatively correlated, because the board plays the role of supervision, rewards andpunishments. The more independence of the board, the more effectively the boardexercise its oversight function, thereby it reduces the managerial corruption.⑤Theproportion of the largest shareholders and managerial corruption is negatively correlated.In other words, the more proportion of the largest shareholders hold, the more active andeffective oversight the executive, thereby it reduces the managerial corruption.⑥The managerial corruption have a significant negative impact on firm performance. Thisstudies have shown that: on the issue of managerial corruption in governance,strengthening moral education and law and regulation is important, but to improve theinternal control over the allocation mechanism, and actively promote the process ofmarket and the establishment of market-based salary structure is the fundamental inhibitmanagerial corruption.In this study, it deepens and expands the theory cognition of the managerialcorruption, and provides the necessary theoretical reference an empirical evidence toprevent managerial corruption. The same time, empirical research on the relationship ofthe strength of managerial power and managerial corruption contributes the newknowledge for the theory literature of managerial power.