Accounting and corruption: a cross-country analysis

Purpose - The purpose of this paper is to better understand the relationship between accounting and auditing quality and the perceived level of corruption. Design/methodology/approach - This relationship is studied by performing a cross-country analysis using public data to measure accounting quality, audit quality, and corruption. Findings - Consistent with the authors' predictions, the paper finds evidence that accounting and auditing quality are significantly related to the level of perceived corruption in a country. Research limitations/implications - These findings suggest that countries with more transparent reporting have lower levels of perceived corruption and that the level of perceived corruption may be reduced in a country by improving accounting and auditing quality. Practical implications - The findings suggest that countries can reduce the level of perceived corruption by improving the transparency of financial reporting by improving accounting and auditing standards. Originality/value - While significant amounts of research has examined perceived corruption, this study is the first to address the impact of high-quality accounting information on the level of perceived corruption.