Effects Of Governance On Corporate Ethics: A Cross- Country Investigation

Boța-Avram, Cristina
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JEL codes: 
M40 - General, M48 - Government Policy and Regulation, M49 - Other.
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This research paper empirically investigates the extent to which the quality of governance measured through six dimensions developed by World Bank has a positive influence on the corporate ethics, or in other words, the ethical behavior of firms in their interaction with public officials, politicians and other companies. By using a dual approach, from geographical and income group classification, this study analyses data from official reports issued by World Bank and World Economic Forum for a final sample of 140 countries, trying to highlight the positive relationship that might exist between governance clusters and ethical behaviour of firms. For the purpose of the paper, a multiple regression analysis was performed. The research results confirm that there are strong positive correlations between most of the governance indicators and companies’ ethical behaviour, even if there are some differences between various geographical areas, and also between different income categories economies, in terms of the intensity of this influence.
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