Assessing the Impact of Governmental Legislation on Corporate Anti-corruption Reporting: Evidence from the Introduction of the UK Bribery Act (2010)

Abstract

Abstract Corruption is common in societies, governments, and the private sector, and is a major obstacle to development and prosperity. It spreads poverty, weakens the quality of education infrastructure, and has the potential to destroy governments and the private sector. Government and non-governmental organizations urge companies to employ strict measures to limit the spread of corruption, and provide instructions for tackling this. A significant example of this is the UK Bribery Act 2010, a law that criminalizes and punishes bribery and corruption on the part of companies operating or listed in the UK. Previous empirical work has focused on companies’ responsiveness to the urging of non-governmental anti-corruption organizations that they disclose their efforts to fight corruption in their annual reports. The scope of the current study is threefold. First, it explores the impact of governmental legislation on corporate anti-corruption disclosure among UK extractive companies from 2003 to 2019, applying content analysis to explore whether governmental legislation has compelled companies to disclose more information on their anti-corruption activities than previous pressure from non-governmental agencies that was not backed by law. Second, it examines the deployment of accepted reporting metrics developed in the environmental field that aid the understanding and interpretation of corruption-reporting quality and behaviour, to understand corporate disclosure behaviour over time and gain insights into the impact of the 2010 Act on their disclosures. Third, it applies regression analysis to a broader sample to examine the impact of corporate governance mechanisms on corporate anti-corruption disclosure from 2014 to 2018. As whole, the study finds that the UK Bribery Act has had a statistically significant impact on the extent of anti-corruption disclosure compared to the period before it came into force