Corruption Perception and Firm Performance: Evidence from High-Polluting Listed Companies in South Africa (International Journal of Business Ecosystem and Strategy (2687-2293))

Summary

• The study uses a balanced panel of 58 high-polluting JSE-listed companies from 2015 to 2025.p.4
• The mean Corruption Perception Index is 44.5, reflecting a moderately weak institutional environment.p.5
• Board independence has a mean of 0.62 and board gender diversity a mean of 0.35.p.5
• Board independence is positively and significantly related to performance (ROA: 0.085; TQ: 0.090).p.6
• Corruption perception negatively affects the financial performance of the 58 JSE high-polluting firms, supporting the sand-the-wheels hypothesis.p.7

Key insights

1. The panel has a cross-section of N=58 and a time dimension of T=11.p.4
2. Minimum values of -0.25 for ROA and 0.50 for Tobin's Q suggest some firms experienced periods of financial distress.p.5
3. Findings support the sand-the-wheels hypothesis, as corruption reduces firm financial performance in highly regulated industries.p.6
4. Findings support agency theory, as corruption perception exacerbates managerial opportunism and weak oversight.p.6
5. Independent directors strengthen monitoring, consistent with agency theory.p.6
6. Benefits of corruption seen in weak-regulation settings do not materialise in JSE-listed high-polluting companies.p.7
7. Prior work on China cites strong economic growth continuing between 1999 and 2007 despite high corruption, supporting a grease-the-wheels view.p.3