Starting a connection is something Dr. Jiri Tresl, visiting professor of finance, does remarkably well. Whether collaborating with friends to conduct research or combining data sources to reveal new relationships, Tresl discovers new ways to make connections in the world around him. Tresl and coauthor Jan Hanousek met while networking during a conference in 2012 and the two became immediate friends. Working with Anastasiya Shamshur, fellow coauthor and former student of Hanousek’s, the group created an entirely new database, combining extensive financial information with the most accurate information on bribery to currently exist.
“Impact of Ownership and CEO Gender on Firms’ Efficiency in Corrupt Operating Environments: Is Bread Gained by Deceit Sweet to a Man?” is innovative because of the newly constructed database. Material was acquired on 14 central and eastern European countries, resulting in 76,552 firm-level observations from 2000 to 2013. Data was combined from the EBRD-World Bank Business Environment and Enterprise Performance Survey (BEEPS) and the Amadeus database, which shows financial information, maintained by Bureau van Dijk. BEEPS retains information on the corruption experiences of firm managers, but is limited by the inaccurate financial information recorded through the survey.
“Evidence on bribery is difficult to obtain,” Tresl said. “We took the BEEPS survey and created bribery environment clusters, and used the Amadeus database to look at companies within those clusters. We matched the official records and databases to create a unique one.”
The results revealed an environment characterized by a high level of bribery has adverse effects on firm efficiency if all of the firms were taking part in bribery practices. In environments with a mix of honest firms and those who bribe, firm efficiency was, on average, higher because honest firms are forced to improve their efficiency in order to compete and survive. Meanwhile foreign-owned firms are often at a disadvantage in bribery environments.
“Foreign-owned firms may lack the knowledge of local formal and informal business practices and on whom and how to bribe. In an environment where competition is relatively fair, foreign-owned firms possess the advantage of better access to financing, better technology and greater managerial experience and expertise,” he said.
Tresl also examined bribery and the influence of CEO gender. Female CEOs were shown to have more obstacles to overcome due to risk aversion and being left out of many corrupt circles. This aspect was a major contribution to existing literature.
“The best research confirms what seems to be common sense, but then adds a twist. Our twist was focusing on bribery and relating it to the previous literature on how gender influences lawbreaking,” he explained. “Firms have to be cautious of their business environments.”
Tresl plans to further explore this topic in the future putting a focus towards a time variable, as bribery environments are, as he stated, a living organism.
His research was presented at the International Finance and Banking Society (IFABS) 2015 Oxford Conference, a prestigious forum for academic researchers, policy makers and practitioners in finance. IFABS was hosted by the Saïd Business School at the University of Oxford, England, September 12-13.