The Impact of Corporate Governance on Corruption Disclosure in European Listed Firms through the Implementation of Directive 2014/95/EU

Round 1

Reviewer 1 Report

The paper is interesting. Some suggestions may improve the paper. The theoretical part should be more accurate. Bribery and corruption are two concepts not sufficient delimited and explained. May be bribery a form of the corruption?

Is the methodology applied by the authors supported by similar studies? Why is this the appropriate way to use the statistical analysis?  

Author Response

Dear reviewer,

Thank you very much for your comments and suggestions. All your recommendations help us to improve our paper. Following the editor’s advises we respond to each suggestion hereafter.

The paper is interesting. Some suggestions may improve the paper. The theoretical part should be more accurate. Bribery and corruption are two concepts not sufficient delimited and explained. May be bribery a form of the corruption?

Regarding the above recommendation, we thank the reviewer for making it and apologies for the confusion. The authors have worked on section 3 and in the whole paper in order to clarify the above aspects. In this sense, following the Principle 10 of the Global Compact, which is called “Fight against corruption”, we highlight that firms have to work against corruption, in all its forms, including extortion and bribery. Furthermore, the standard 205 of the GRI and other research works (Burduja, 2019 and Di Nicola et al, 2008) define corruption in the same lines. Thus, we totally agree with the clarification made by the reviewer where he suggested that bribery is a form of the corruption. In this regard, we have focused on the corruption concept in all our paper instance of the corruption and bribery. Furthermore, we would like to clarify that it was a mistake made in the writing and in the theorical aspect. However, when we collected the corruption index, we did it according to the GRI and Directive 2014/95/EU, therefore, the corruption index is measured properly.

Is the methodology applied by the authors supported by similar studies? Why is this the appropriate way to use the statistical analysis?  

Regarding the above comments, the authors apologies for forgetting the quotes related to the studies that have been followed to realize the research design section and have written them in the paper. In this regard, the authors would like to highlight that we have focused on studies such as Muttakin and Khan, 2014, Khan et al. (2013), Pindado et al. (2008), among other that were published in international journals: Journal Business and Ethics, Advances in Accounting and Journal of Business Research.

Focusing on the statistical analysis, firstly, we have to highlight that the panel data methodology is used in order to eliminate the existence of heterogeneity and heteroscedasticity in our variables (Pindado et al. 2008 and Khan et al. 2013). Second, we tested the multicollinearity problems through the VIFs and the correlation matrix and the figures show that there is not multicollinearity in our variables. Furthermore, according to the corruption disclosure index, our dependent variable, the Cronbach’s alpha coefficient provides that it is consistent. Third, in the text, we have clarified that we have used multiple regression analysis, based on Muttakin and Khan (2014) and Khan et al. (2013), in order to study whether there are significant relationships between the corporate governance mechanisms and the corruption disclosure. These regressions show through the test p-values, R² and F-statistic that the models are consistent, and their results are in line with previous literature. Fourth, based on Khan et al. (2013), the authors have also corroborated their results in the further analyses. In this vein, the figures show that the findings are robustness. Regarding the random effects used in the further analyses, we have to highlight that they are useful models to test the unobservable heterogeneity (Pindado et al., 2008) and the findings present that they are suitable to test our models and corroborate the previous relationship between corporate governance and corruption disclosure.

 

We are grateful for all suggestions and recommendations that we firmly believe are vitally important for the improvement of the work.

 

REFERENCES

Di Nicola, A.; Espa, G.; Costantino, F.; Dickson, M.M. The Private Corruption Barometer. eCrime Research Reports 04. 2008, p. 5. Available online: ttps://www.researchgate.net/publication/330442286_The_Private

GRI 205. Anticorruption. Global Reporting Iniciative. 2016.

Khan, A.; Muttakin, M. B.; Siddiqui, J. Corporate Governance and Corporate Social Responsibility Disclosures: Evidence from an Emerging Economy. Journal of Business Ethics. 2013, 114(2), 207–223.

Muttakin, M; Khan, A. Determinants of corporate social disclosure: Empirical evidence from Bangladesh. Advances in Accounting. 2014, 30 (1), 168-175.

Pindado, J.; Rodrigues, L.; de la Torre, C. Estimating financial distress likelihood. Journal of Business Research. 2008, 61(9), 995-1003.  

 

Reviewer 2 Report

First of all, I want to comment that I have found it is a very interesting paper. It is a very interesting and current topic that can bring interesting contributions in various fields. However, I will make some suggestions, so that it can be improved.

I believe that the abstract should be improved by introducing certain aspects. The authors should incorporate some initial sentences about the context of the work, which indicate the importance of the issue and its interest in the study. In addition you should indicate the methodology employed, the time period that covers the investigation, as well as the number of companies of the sample and the type. This information is retrieved in the paper but the appearance in the abstract allows the reader to have a quick overview of the work.

A format error: In line 40, you must write Directive (first word) with uppercase, in order to maintain the homogeneity with the rest of the paper.

I think that in line 97 you have forgotten “of”: the best of our knowledge.

I consider that, in section 2, you must write some small paragraphs in order to present and explain briefly the theories used in the paper: legitimacy theory, stakeholders theory, agency theory and servant leadership theory.

You mention legitimacy, but not explain the basis of the theory. So, I consider you must add some information about it.

With respect to stakeholder theory, it is explained in lines 124-126, but I recommend to move this ideas with the remainder theories.

The agency theory is cited in line 247, but the authors do not explain the fundamentals of this theory. So, I recommend give a brief explanation in section 2.

The servant leadership theory is mentioned in line 263, but I consider that its explanation could be in section 2, together the rest of the theories.

I suggest the authors to review the lines 132-133 because I think that something is missing between statistics and the number (line 132).

In line 194, you must review this words “the of number”. I think something is wrong.

In line 274, you have to finish the sentence with a point.

In line 285, at the end of the hypothesis, some expression appears 3. Results. Please eliminate it.

I recommend making a discussion section, in order to better explain your results linking with the previous literature. I consider second paragraph of the conclusions could be part of the discussion.

Later, make a section about conclusions, limitations and future lines of research. In these conclusions, you must explain global results obtained. I consider you must improve the implications of the research.

At the end of the paper, in lines 509-522, you must add this information: author contributions, funding and acknowledgements (the two last ones, just in case).

With respect to the way of citing in the text, I think it is not right in this journal. For example, you use in line 54, [4]. I believe, as I have observed in other papers and in the norms of the journal, that the author has to say, for example: according to X [4].

In the same way, in line 76, you say: Following [14], I believe that it is not correct. From my point of view, it would be: Following X [14]. You should review all citations of this type.

Finally, in References, I have seen the citations with 1, 2, 3,… not [1], [2], [3], …. You must prove this detail.

Thank you very much for your paper, congratulations for your effort and results.

I think the paper is good, although it should be improved according to these suggestions.

Best regards,

Author Response

 

Dear reviewer,

Thank you very much for your comments and suggestions. All your recommendations help us to improve our paper. Following the editor’s advises we respond to each suggestion hereafter.

First of all, I want to comment that I have found it is a very interesting paper. It is a very interesting and current topic that can bring interesting contributions in various fields. However, I will make some suggestions, so that it can be improved.

-I believe that the abstract should be improved by introducing certain aspects. The authors should incorporate some initial sentences about the context of the work, which indicate the importance of the issue and its interest in the study. In addition you should indicate the methodology employed, the time period that covers the investigation, as well as the number of companies of the sample and the type. This information is retrieved in the paper but the appearance in the abstract allows the reader to have a quick overview of the work.

According to that suggestion, we have incorporated in the abstract the above comments that enrich the quality of it. In this vein, we thank the reviewer for this commentary because it could allow readers to overview better the paper.

-A format error: In line 40, you must write Directive (first word) with uppercase, in order to maintain the homogeneity with the rest of the paper.

We apologies for the mistake made in the line 40 and, therefore, we have corrected it in this line and throughout the entire paper.

-I think that in line 97 you have forgotten “of”: the best of our knowledge.

Regarding the above suggestion, we totally agree with the reviewer. And, we have incorporated of in the sentence.

-I consider that, in section 2, you must write some small paragraphs in order to present and explain briefly the theories used in the paper: legitimacy theory, stakeholder theory, agency theory and servant leadership theory. You mention legitimacy, but not explain the basis of the theory. So, I consider you must add some information about it. With respect to stakeholder theory, it is explained in lines 124-126, but I recommend to move this ideas with the remainder theories. The agency theory is cited in line 247, but the authors do not explain the fundamentals of this theory. So, I recommend give a brief explanation in section 2.The servant leadership theory is mentioned in line 263, but I consider that its explanation could be in section 2, together the rest of the theories.

Following the recommendation of the reviewer, the authors totally agree with it. In this vein, we have incorporated some paragraphs, in section 2, in order to present and define clearer the theories (legitimacy, the stakeholder and the agency theories) that we have used in the work. Furthermore, we have moved some explanations of the theories that did not fit properly in other sections to the section 2. According to the servant leadership theory, we have realized that it is not suitable with our main research objective, thus, we have drop it from the paper. Regarding the above arguments, we would like to thank the reviewer because this recommendation increases the quality of this paper.

-I suggest the authors to review the lines 132-133 because I think that something is missing between statistics and the number (line 132).

We apologies for the mistake made in the lines 132-133. For this reason, we have added the connector “Regarding the” for a better understanding of the sentence.

-In line 194, you must review this words “the of number”. I think something is wrong.

According to the reviewer’s comment, we have corrected the above mistake.

-In line 274, you have to finish the sentence with a point.

We apologies for the mistake made in the line 274 and, in so doing, we have corrected it.

-In line 285, at the end of the hypothesis, some expression appears 3. Results. Please eliminate it.

According to the above suggestion, we have deleted the “3. Results”. We apologies for making this mistake.

-I recommend making a discussion section, in order to better explain your results linking with the previous literature. I consider second paragraph of the conclusions could be part of the discussion.

Regarding the above comment, we totally agree with the reviewer to create and move same sections of our paper as previous literature from sustainability journal does. In this vein, we have made a new section which is called discussion in order to explain there the discussion of our results. In so doing, we have also moved some paragraphs from the results and conclusion sections that could be part of the discussion. 

-Later, make a section about conclusions, limitations and future lines of research. In these conclusions, you must explain global results obtained. I consider you must improve the implications of the research.

We completely agree with the reviewer that the we had to make a new section called conclusions, limitations and future lines of research. Furthermore, we have improved the contributions and implications of our paper adding these new paragraphs:

-As contributions we have added:

“From the point of view of the theoretical contributions,  the existing literature related to corporate social responsibility disclosure (Ioannou and Serafeim, 2012; Gallardo-Vázquez, Barroso-Méndez, Pajuelo-Moreno and Sánchez-Meca, 2019b; Khan, Muttakin and Siddiqui, 2013; Li and Zhang, 2010) is extended. Namely, this study complements previous literature on analysing which factors influence in the corporate social responsibility disclosure. While prior researches show that corporate governance impact on the corporate social responsibility disclosure (Said, Zainuddin, and Haron, 2009; Jizi, Salama, Dixon, and Stratling, 2014), this work highlights, specifically, that some corporate governance mechanisms such as CEO duality and board size impact on the disclosure of corruption issues. In addition, our findings also help to expand the corporate governance literature showing that managers should focus on outside directors and CEO duality because they impact on corporate social responsibility disclosure, namely, in corruption aspects. In this vein, to the extent of our knowledge, this work is also the first paper that analyses how corporate governance mechanisms impact on corruption disclosure issues according to the European Directive 2014/95/EU. Therefore, we address the call for more studies (Na et al. 2018) in studying how corporate governance mechanism may impact on corruption aspects, namely, in the disclosure, after the publication the Directive 2014/95/EU (Popescu, 2019; Matuszak, Ł.; Rózańska, 2017).

From the point of view of the methodological contributions, in the corporate social responsibility disclosure literature, this paper is, as far as we know, the first to propose a corruption disclosure index related to the Directive 2014/95/EU. Thus, this study provides a guide to firms, showing the main aspects that should be considered regarding the disclosure in corruption.”

 

-As implications we have added:

 

“Finally, the results of this research work have also some relevant implications. First, the findings address the call of the academic community that studies which factors impact on corporate social responsibility disclosure, specifically, on aspects of corruption (Na, Young-Hee, Yang, 2018). Furthermore, our findings offer researches a new perspective regarding the corporate governance mechanisms that may influence in the corruption disclosure. Thus, this study opens a new door for researches who want to analyse these relationships in other environments. Second, this study has implications for managers highlighting that this paper provides guidelines about how to manage corporate governance mechanisms in order to enhance corporate social responsibility disclosure. Accordingly, managers should focus on corporate governance mechanism such as outside directors and CEO duality when they develop the strategies and firm goals related to the corruption disclosure. And, third, our results provide an interesting point of view to regulators who studies the corporate social responsibility and, namely, the corruption issues. Furthermore, our work may be considered a useful guide to help regulators and policy makers to work on appropriate regulatory reforms related to corporate governance codes and international standards in corporate social responsibility.”

 

-At the end of the paper, in lines 509-522, you must add this information: author contributions, funding and acknowledgements (the two last ones, just in case).

We thank the reviewer for the recommendation.

-With respect to the way of citing in the text, I think it is not right in this journal. For example, you use in line 54, [4]. I believe, as I have observed in other papers and in the norms of the journal, that the author has to say, for example: according to X [4].

Following the reviewer’s recommendation, we have corrected all the mistakes related to the quotes.

-In the same way, in line 76, you say: Following [14], I believe that it is not correct. From my point of view, it would be: Following X [14]. You should review all citations of this type.

Finally, in References, I have seen the citations with 1, 2, 3,… not [1], [2], [3], …. You must prove this detail.

According to the reviewer’s suggestion, we have corrected all the mistakes.

 

Thank you very much for your paper, congratulations for your effort and results.

I think the paper is good, although it should be improved according to these suggestions.

Best regards,

We are grateful for all suggestions and recommendations that we firmly believe are vitally important for the improvement of the work.

 

 

REFERENCES

Gallardo-Vázquez, D.; Barroso-Méndez, M.J.; Pajuelo-Moreno, M.l.; Sánchez-Meca, J. Corporate Social Responsibility Disclosure and Performance: A Meta-Analytic Approach. Sustainability. 2019b), 11,1115. 1-33.

Ioannou, I.; Serafeim, G.  The Consequences of Mandatory Corporate Sustainability Reporting. Harvard Business School Research Working Paper. 2012, 11-100. 1-49

Jizi, M. I.; Salama, A.; Dixon, R.; Stratling, R. Corporate governance and corporate social responsibility disclosure: Evidence from the US banking sector. Journal of business ethics. 2014, 125(4), 601-615.

Khan, A.; Muttakin, M. B.; Siddiqui, J. Corporate Governance and Corporate Social Responsibility Disclosures: Evidence from an Emerging Economy. Journal of Business Ethics. 2013, 114(2), 207–223.

Li, W.; Zhang, R. Corporate social responsibility, ownership structure, and political interference: Evidence from China. Journal of Business Ethics. 2010, 96 (4), 631-645.

Na, K.; Young-Hee K.; Yang K. The Effect of Corporate Governance on the Corruption of Firms in BRICs (Brazil, Russia, India & China). Social Sciences. 2018, 7.6. 85.

Matuszak, L.; Rózańska, E. CSR disclosure in Polish-listed companies in the light of Directive 2014/95/EU requirements: Empirical evidence. Sustainability (Switzerland). 2017, 9(12).

Popescu, G.N. Corporate Social Responsibility, Corporate Governance and Business Performance: Limits and Challenges Imposed by the Implementation of Directive 2013/34/EU in Romania. Sustainability. 2019, 11, 5146.

Said, R.; Hj Zainuddin, Y.; Haron, H. The relationship between corporate social responsibility disclosure and corporate governance characteristics in Malaysian public listed companies. Social Responsibility Journal. 2009, 5 (2), 212-226.  

 

 

 

 

Reviewer 3 Report

attached

Comments for author File: Comments.pdf

Author Response

 

Dear reviewer,

Thank you very much for your comments and suggestions. All your recommendations help us to improve our paper. Following the editor’s advises we respond to each suggestion hereafter.

 

-It is an interesting setting of the EU Directive that you should emphasize. Hope to see more details, which will distinguish your paper from many similar studies. For example, you should justify why EU, what’s unique, and what’s the implications for EU regulations and practices.

Regarding the above aspects, we thank the reviewers’ comments because they increase the quality of the paper without any doubt. For this reason, the authors have explained more clearly in the introduction section, firstly, why we have focus on the European Union and why this context has to be studied. Thus, we have included the following paragraph:

“Before the adoption of this Directive, the European Union had paid little attention to the disclosure of non-financial information and, internationally, for several decades, the Global Report Initiative (GRI) has been a reference for the voluntary preparation of this type of non-financial information. However, the adoption of Directive 2014/95/EU constitutes a turning point related to the normalization of non-financial information by companies located in the Member States of the European Union. Besides, the Directive implements the guidelines for firms to improve the quality and transparency in the disclosure of such information and presents the opportunity to create a homogeneous regulatory framework for non-financial information at European level. Therefore, we highlight that the European context constitutes a scenario of relevant interest to be analyzed.”

-Secondly, the authors have given more details in the paper in order to distinguish more our contributions from other similar studies. In so doing, we have added the following paragraphs:

In the introductions, we have included this paragraph:

“And, from a methodological point of view, this work proposes a corruption disclosure index related to the Directive 2014/95/EU. In doing so, the corporate social responsibility disclosure regarding to corruption is also extended”.

And, in the conclusion, the contribution aspects have been improved:

“From the point of view of the theoretical contributions, the existing literature related to corporate social responsibility disclosure (Ioannou and Serafeim, 2012; Khan, Muttakin and Siddiqui, 2013; Li and Zhang, 2010) is extended. Namely, this study complements previous literature on analysing which factors influence in the corporate social responsibility disclosure. While prior research show that corporate governance impact on the corporate social responsibility disclosure (Said, Zainuddin, and Haron, 2009; Jizi, Salama, Dixon, and Stratling, 2014), this work highlights, specifically, that some corporate governance mechanisms such as CEO duality and board size impact on the disclosure of corruption issues. In addition, our findings also help to expand the corporate governance literature with respect to corporate social responsibility disclosure, namely, in corruption aspects, showing that managers should focus on outside directors and CEO duality in order increase the firms’ disclosure. In this vein, to the extent of our knowledge, this is also the first paper that analyses how corporate governance mechanisms impact on corruption disclosure issues according to the European Directive 2014/95/EU.”

 

Therefore, we address the call for more studies (Na et al. 2018) on studying how corporate governance mechanism may impact on corruption aspects, namely, in the disclosure, after the publication the Directive 2014/95/EU (Popescu, 2019; Matuszak, Ł.; Rózańska, 2017)”.

 

-Thirdly, we completely agree with the reviewer that we had to improve the implications of our paper. In this regard, we have added the following paragraph in the conclusion, limitations and future research section:

 

“Finally, the results of this research work have also some relevant implications. First, the findings address the call of the academic community that studies which factors impact on corporate social responsibility disclosure, specifically, on aspects of corruption (Na, Young-Hee and Yang, 2018). Furthermore, our findings offer researches a new perspective regarding the corporate governance mechanisms that may influence in the corruption disclosure. Thus, this study opens a new door for researches who want to analyse these relationships in other environments. Second, this study has implications for managers highlighting that this paper provides guidelines about how to manage corporate governance mechanisms in order to enhance corporate social responsibility disclosure. Accordingly, managers should focus on corporate governance mechanism such as outside directors and CEO duality when they develop the strategies and firm goals related to the corruption disclosure. And, third, our results provide an interesting point of view to regulators who studies the corporate social responsibility and, namely, the corruption issues. Furthermore, our work may be considered a useful guide to help regulators and policy makers to work on appropriate regulatory reforms related to corporate governance codes and international standards in corporate social responsibility.”

 

-My main suggestion is that you should tell a richer story and link to more literature by discussing more relevant channels. You should consider, for example, Market competition as a governance mechanism: Giroud, X., and H., Mueller, 2011, Corporate governance, product market competition, and equity prices. Journal of Finance 66, 563-600. Second, it would be interesting to take into account other corporate governance internal (Giroud and Mueller, 2011; Li, 2014). On inside debt as governance: Li, F., Lin, S., Sun, S., Tucker, A. 2018. Risk-Adjusted Inside Debt. Global Finance Journal 35: 12-42. The interactions between the executives, such as mutual monitoring among the executives: Li, Z.F., 2014, Mutual monitoring and corporate governance, Journal of Banking & Finance, 45, 255-269; Li, Z.F., 2018, Mutual monitoring and agency problem. https://www.researchgate.net/publication/272305464_Mutual_Monitoring_and_Agency_Problems; Regarding mutual monitoring, Li (2014) finds that it is an effective and relevant control mechanism in firms. Thus, it could be interesting to study how mutual monitoring influence on corporate social responsibility disclosure” and external interactions between CEOs in the industry tournament: Coles et al. 2018, Industry Tournament Incentives, Review of Financial Studies, 31(4):1418-1459; Or compensation incentives: Core, J. and Guay W., 1999, The use of equity grants to manage optimal equity incentive levels, Journal of Accounting and Economics 28, 151-184. You need to discuss those aspects of possible channels to give readers a more comprehensive view and a richer story and/or point out future research direction from these perspectives. Additionally, you should refer to more recent development in this area. See the summary of the literature on the relation between CSR and disclosure in Li, F. 2018. A survey of corporate social responsibility and corporate governance. Research Handbook of Finance and Sustainability. Editors: Boubaker. S., D. Cumming, and D.K. Nguyen. Edward Elgar Publishing, UK.

 

Regarding the above references that the reviewer has recommended. The authors would like to thank the reviewer because of the references suggested to them. The references are very useful and increase the quality of our paper. Accordingly, we have used the following references:

 

First, we have quoted Li (2018) and Li (2014) in the hypotheses development section because they help understand better the aspects related to the board size and outside directors. And, second, in the future lines of research, we have tried to clarify them using the references of Giroud and Mueller (2011) and Li (2014) among others.

 

 

 

In conclusion, I would like to thank the authors for a very interesting, unique and potentially important paper. Hope these comments and suggestions can help further their study.

 

We are grateful for all suggestions and recommendations that we firmly believe are vitally important for the improvement of the work.

 

REFERENCES

Giroud, X.; Mueller, HM. Gobierno corporativo, competencia en el mercado de productos y precios de acciones. The Journal of Finance, 2011. 66 (2), 563-600.

Ioannou, I.; Serafeim, G.  The Consequences of Mandatory Corporate Sustainability Reporting. Harvard Business School Research Working Paper. 2012, 11-100. 1-49

Jizi, M. I.; Salama, A.; Dixon, R.; Stratling, R. Corporate governance and corporate social responsibility disclosure: Evidence from the US banking sector. Journal of business ethics. 2014, 125(4), 601-615.

Khan, A.; Muttakin, M. B.; Siddiqui, J. Corporate Governance and Corporate Social Responsibility Disclosures: Evidence from an Emerging Economy. Journal of Business Ethics. 2013, 114(2), 207–223.

Li, W.; Zhang, R. Corporate social responsibility, ownership structure, and political interference: Evidence from China. Journal of Business Ethics. 2010, 96 (4), 631-645.

Li, Z.F. Mutual monitoring and corporate governance, Journal of Banking & Finance. 2014, 45, 255-269.

Li, Z.F. Mutual monitoring and agency problem. 2018. https://www.researchgate.net/publication/272305464_Mutual_Monitoring_and_Agency_Problems;

Na, K.; Young-Hee K.; Yang K. The Effect of Corporate Governance on the Corruption of Firms in BRICs (Brazil, Russia, India & China). Social Sciences. 2018, 7.6. 85.

Matuszak, L.; Rózańska, E. CSR disclosure in Polish-listed companies in the light of Directive 2014/95/EU requirements: Empirical evidence. Sustainability (Switzerland). 2017, 9(12).

Popescu, G.N. Corporate Social Responsibility, Corporate Governance and Business Performance: Limits and Challenges Imposed by the Implementation of Directive 2013/34/EU in Romania. Sustainability. 2019, 11, 5146.

Said, R.; Hj Zainuddin, Y.; Haron, H. The relationship between corporate social responsibility disclosure and corporate governance characteristics in Malaysian public listed companies. Social Responsibility Journal. 2009, 5 (2), 212-226.  

 

 

 

Author Response File: Author Response.pdf

Round 2

Reviewer 1 Report

The authors improved significantly the paper. Aspects related to the literature review and clarification regarding corruption as a concept may be improved.

Author Response

Dear reviewer:

Regarding the last suggestion related to the improvement of the corruption as a concept, we have reorganized and incorporated in section 3.1. some definitions of corruption in order to understand better the concept. Thus, section 3.1:

 

"Investigations, among others, into some firms such as Rolls-Royce in China or Wall Mart for alleged cases of corruption in their commercial relations have led to enormous concern on the part of society and a loss of trust and legitimacy for firms [38]. In this regard, corruption is among the social and environmental problems that most concern the population due, among other reasons to the enormous influence that companies have on their generation. Corruption “is a severe impediment to sustainable economic, political, and social progress for countries at all levels of development…This underscores the importance of intensifying efforts to improve governance frameworks and strengthen actions to improve the prevention, detection, and sanctioning of corruption” [39].

Furthermore, we highlight other definitions of corruption from the viewpoint of non-governmental organizations and voluntary initiatives such as Transparency International, the GRI 205 and the Global Compact. Accordingly, Transparency International [6] argues that corruption can be defined as “the abuse of power for personal gain” and can be classified as: (i) large-scale corruption, whether the acts have been committed at the highest levels of the government involving the distortion of policies or central functions of the State; and (ii) minor or bribery corruption, in the event that there is an offer, promise, delivery, acceptance or requirement of an incentive to carry out an illegal, unethical action that involves abuse of trust and political corruption. And, the GRI 205 [40] and the Principle 10 of the Global Compact[1] also address corruption such as bribery practices, unethical payments, fraud, extortion, collusion and money laundering.

Similarly, prior researchers have contributed with some definitions to the academic literature. No and Osuagwu [11] explain that corruption can be definided “as the misuse or abuse of positions, power or procedures for personal or group interests, needs and wants. It involves the violation of established rules, practices, and procedures for personal and/or group interests. It is concerned with actions directed towards securing wealth, power, authority, influence, relevance or advantage through illegal means”. Additionally, Issa and Alleyne [12] explain that the corruption impacts negatively on the economic development, corrode civil society and reduces democratic accountability. Besides, corruption involves huge social costs, among which one of the most serious is the increase in poverty [43], especially in underdeveloped or developing countries [9]. Regarding these arguments, corruption can be performed through the following forms: bribery, fraud and conflicts of interest [41,42].

In this regard, following Na et al. [14] existing literature [13, 44-48] shows that corruption is affected, on the one hand, by external factors such as governance structures, legal systems or corruption networks and, on the other hand, by internal factors of firms such as the firm age, the firm growth rate, corporate governance and so forth. In this research, the authors are focused on the corruption disclosure as outlined in the European Directive 2014/95/EU and on the relationships between corporate governance mechanisms and corruption disclosure. In the next section, we draw from previous literature to develop hypotheses about whether some factors related to corporate governance mechanisms impact on corruption disclosure."

 

 

To summarize, we would like to thank you very much for all your recommendations and suggestions, they have helped to improve significantly the quality of this work.

 

Reviewer 3 Report

Congratulations on the successful revision. 

Author Response

Thank you very much for your recommendations and suggestions, they have helped to improve significantly the quality of this work.