Compliance or resistance: firms' responses to corruption and performance in an emerging economy

Paper Session - 1806. Corruption, Misconduct and PerformanceMeeting Theme: Opening GovernanceEmerging economy firms (EEFs) have achieved high growth in corruptive environments. Drawing upon the institutional theory, we examine entertainment expenditure as firms' active responses, compliance or resistance, to corruption practices in emerging economies, and further investigate the effects on firm performance. Results from panel data of 1244 observations of 484 Chinese listed firms show that firms' compliance to corruption has a positive effect on their performance. Moreover, institutional factors of market development and state ownership negatively moderate this relationship; whereas situational factors of distance to bankruptcy and slack exhibit positive moderating effects