Corporate corruption prevention, sustainable governance and legislation: First exploratory evidence from the Italian scenario

Abstract

This paper aims to identify the main issues and drivers of sustainable corporate governance to prevent corruption, analysing the interaction between the principal governance body–Board of Directors–and the implementation and application of corruption prevention plans by pointing out exploratory evidence from the company sample. This paper is built upon two steps. First, the content analysis research method is applied, selecting a sample of Italian companies and analysing information from the corruption prevention plans to establish the role of the Board of Directors in the management of company's system. Second, the level of the implication of Board of Directors in drafting through the identification of the Global Indicator is investigated, measuring the degree of the Board of Directors' involvement and making use of the content analysis's results. Additionally, a linear regression between the Global Indicator, companies dimensional indicator and performance indicators is carried out with the aim to define variables affecting this process. The paper proposes exploratory evidence which shows a deep understanding of the governance body in the construction and application of the corporate corruption prevention plans, taking into consideration crucial information from: the anti-corruption national legislation (Law 190/2012), risk management and organization model (Legislative Decree 231/2001), corporate sustainability and compliance programs adopted by companies. The originality of the findings derives from the need to establish an integrated sustainable corporate governance model directed at preventing corruption. Thus, this paper proposes not only the analysis of the Italian companies' compliance sustainable models to prevent corruption in their corporate governance but shows the path for future research on the topic.

Introduction

In recent years, the phenomenon of corruption (ACFE, 2018, Joseph et al., 2016, Podolniy and Podolnaya, 2016) has increased with both the birth of sustainable strategies for corruption prevention in company systems and the attention of legislation at the international level (Manacorda et al., 2014). Particularly, the adoption of anti-corruption business models is strictly connected to each national legislation and integrated into their corporate governance system through a specific compliance program, by involving both internal actors, such as the board of directors (BoD) and internal auditors, and external actors such as stakeholders. Thus, companies and their main internal actors, to avoid briberies and establish a good corporate governance model (Yoshikawa and Rasheed, 2009, Wijayati et al., 2015), are deputed to proactively manage anti-corruption principles and disclosure (Hahn and Kiihnen, 2013, Joseph et al., 2016), safeguarding corporate sustainability (Adnan et al., 2018, Allais et al., 2017, Elkington, 2002, Fuente et al., 2017, Lozano, 2012; Schrippe, Duarte Robert et al., 2013, Stacchezzini et al., 2016) and avoiding a negative impact on the environment and society (Elkington, 2002).

In this context, this paper presents the investigation of the role played by the BoD as the principal governance body and as an internal business actor (Allegrini et al., 2006, Melville, 2003, Sarens et al., 2012) that promotes corporate corruption prevention with the company system. Thus, the proposition of exploratory evidence, from a selected sample of 20 Italian companies operating in several economic fields, derives from the main issues and drivers of corporate governance and their relationship with the interaction between the BoD and the implementation and application of corruption prevention plans (Aguilera, 2005) and the disclosure of their information (Joseph et al., 2016, Saenz and Brown, 2018). Additionally, a new integrated sustainable corporate governance model in the Italian scenario has surfaced.

Adopting the theoretical framework of institutional theory (Adegbite, 2015, Aguilera, 2005, Dacin et al., 2002, Meyer and Rowan, 1977, Scott, 1987, Tolbert and Zucker, 1999), this research has been carried out in two steps. Firstly, content analysis was the chosen methodology (Krippendorff, 2013), applied to the corporate corruption prevention plans of the selected sample. The investigation was founded on the examination of information included in the corruption prevention plans under the primary key indicators (PKI) analysed through a coding score system that allowed us to set up the real accountability role of the BoD compared to the control activities in the management of company system. Starting from the hypothesis that the increasing involvement of the BoD in the drafting of anti-corruption plans increases their effectiveness, the second step aimed to investigate the level of the BoD's implication in drafting the prevention plans, which are variables affecting its involvement. Thus, we identified the global indicator (GY), measuring the degree of the BoD's involvement in the content analysis's result. Additionally, to identify which variables affect this process, a linear regression analysis between the GY, company dimensional indicator and performance indicators was carried out. Findings propose the main issues and factors of sustainable corporate governance in the relationship between the BoD and the control function (Sarens and De Beelde, 2006, Sarens et al., 2012) in the anti-corruption model. As a pioneering study, this paper presents a deep understanding of the role of the main governance body in the construction and application of the corporate corruption prevention plans, in light of the anti-corruption national legislation (Law 190/2012), risk management and organization model (Legislative Decree 231/2001), corporate responsibility and related compliance programs adopted by Italian companies under the corporate governance models filling the existing literature gap. Thus, results should serve as a useful integrated sustainable corporate governance model to prevent corruption on the basis of a corporate sustainability system (Lozano and Huisingh, 2011) and a specific compliance program (Lopatta et al., 2017).

Additionally, following the debate on corporate sustainability, corruption and its prevention in the economic system of several states (Manacorda et al., 2014, Mendelshon, 2017), this paper contributes to the institutional theory (Aguilera, 2005), proposing a new discussion for academics, practitioners and policymakers about the companies' compliance path that should be modeled to prevent corruption in their sustainable corporate governance model. Moreover, the paper and its results aim to provide an answer to the call for research launched by Di Pietra and Melis (2016) in their study inviting scholars to invest “in contributions to this highly promising field”. Lastly, this paper's results lead the way for future researches paths on the topic.

The remainder of the paper is organized as follows: Section 2 examines relevant literature. Section 3 presents the research methodology. Section 4 presents the findings and discussion from the corruption prevention plans. Lastly, Section 5 presents conclusions, limitations and future research approaches.