Introduction

Corruption is defined as the abuse of power for private gain (Cuervo-Cazzura 2016; International Transparency 2023), the misuse of public office for private gains (Neu et al. 2013) or the exchange of political power for wealth (Yin and Zhang 2019). It may include bribes and illegal payments as well as money laundering by corporations which seek to obtain preferential treatment. Research shows that despite numerous efforts undertaken by countries and organizations, corruption remains common business practice (Hess and Ford 2008). Corruption is identified at both company and country levels as having consequences for economic prosperity and the integrity of the social structure (Blanc et al. 2017). Specifically, at the company-level corruption distorts business rules of competition and market functioning, increasing transaction time and operation costs (Rose-Ackerman 1997). It is detrimental to competition and growth and changes business culture (Álvarez Etxeberria and Aldaz Odriozola 2018), shifting company focus from increasing efficiency to engaging in dishonest behavior (Murphy and Albu 2018).

The negative influence of corruption upon society and the economy (Barkemeyer et al. 2015), together with the global nature of incidences of corruption, have drawn attention of governments, regulations and numerous stakeholders. Initiatives undertaken to fight against bribes and illegal payments demand increased disclosure of anti-corruption activities and policies. Efforts toward greater transparency are driven by the evidence from existing studies, which suggests that there should be an association between improved anti-corruption disclosure and less illegal practice, although some scholars question this association (Aerts and Cormier 2009; Cho et al. 2017). Kowalczyk-Hoyer (2012:4) views disclosure as the indication of a firm’s “commitment, awareness and action”, emphasizing that companies are important partners in countries’ efforts to reduce corruption and that they may contribute to solving the problem rather than being a part of it (Calderón et al. 2009). The call for greater reporting of anti-corruption policies and actions corresponds with the overall trend of increased non-financial disclosure that includes environmental, social and governance (ESG) information. Anti-corruption disclosure has become an integral part of ESG disclosure included in the governance dimensions, both in the Global Reporting Initiative standards in 2002 and the United Nations Global Compact framework in 2004 (Branco and Matos 2016; Sari et al. 2021).

In recent years, several regulatory frameworks of non-financial reporting have been proposed that embrace both a voluntary and mandatory approach indicating the transition from the former to the latter (Czaja-Cieszyńska 2022; Matuszak and Różańska 2021). While studies on the evolution of environmental and social disclosure have been growing exponentially, the research on the determinants, scope and development of anti-corruption remains scarce (Sari et al. 2021). Additionally, the effectiveness of disclosure remains highly dependent on the enforcement determined by country and company-level characteristics. As in the case of any recommendation or regulation, the introduction of anti-corruption disclosure standards is determined by the institutional environment, which includes freedom of speech and media strength (Blanc et al. 2017). Enforcement is also constrained by the organizational choices of how to react to external pressures. As noted by institutional theory, companies respond differently to pressure and pursue different strategies to institutional change. In other words, certain firm characteristics determine how companies implement principles of anti-corruption disclosure and what reports they publish. In addition, the record of previous voluntary company practice matters for the effectiveness of the introduced mandatory reporting legislation. In particular, as documented by Lappai-Makra and Kov (2022) in their research on Hungarian listed companies, a greater effect of NFRD is noted for companies that have not reported non-financial information voluntarily and on matters that have not been regulated earlier before the regulation was implemented. Similar conclusions are drawn from the studies on the impact of NFRD on reporting practice of companies from Poland and Romania (Dumitru et al. 2017). Finally, the effect of coercive mechanisms is strengthened with the presence of corporate social responsibility (CSR) committee in the company board and adopted assurance of report by an external entity (Salento et al. 2023).

In this paper, we intend to examine company reactions to coercive pressures (DiMaggio and Powell 2000; Scott 1995) of regulation on anti-corruption disclosure, as formulated by the Non-Financial Reporting Directive (NFRD; UE/2014/95). The NFRD (EU Commission 2014) is the first attempt to impose regulation on companies and formally demand self-reported information on anti-corruption practice. In particular, by drawing upon institutional theory, we argue that companies respond in varying ways to the coercive pressure of NFRD (Lippai-makra and Kov 2022), and they issue reports on anti-corruption policy and practice in various formats and scopes. We attribute these differences to differences in firm linkages with the external environment, proxied by board independence and ownership dispersion. To test the formulated hypotheses, we link the anti-corruption disclosure measured, according to GRI standards, with the presence of independent directors and an independent chair on the board, as well as with the extent of dispersed ownership. We use a sample of companies listed on the main stock exchange indices (WIG20, mWIG40 and sWIG80) at the Warsaw Stock Exchange (Poland) that were subject to NFRD legislation over the period 2015–2019. The analysis of 72 listed companies reveals that board independence and ownership dispersion are associated with a higher scope of anti-corruption disclosure.

Our paper contributes to the existing literature in two ways. Firstly, in adding to the rich body of studies on ESG reporting, we investigate the evolution of anti-corruption disclosure, which remains a relatively unexplored topic (Sari et al. 2021). Specifically, being a vital topic for business and society anti-corruption information is found to be among the least disclosed component of non-financial reporting (Matuszak 2017). We identify the dimensions of anti-corruption disclosure, adopting the benchmark of GRI standards. Governance disclosure has been developing over the last 30 years, driven by the best practice codes focusing on standards of board work, information policy toward investors, executive compensation. In spite of this, little attention has been devoted to the communications concerning firms’ anti-corruption measures, reports on incidents of corruption or anti-corruption training aimed at organizational leaders. Moreover, prior studies predominantly focus on voluntary reporting (Sari et al. 2021), with few attempts to understand the role of regulation for improving anti-corruption disclosure (Matuszak 2017; Matuszak and Różańska 2021). The analyses of the effects of regulations imposing greater transparency on companies’ anti-corruption commitments remain scarce. Our research documents the evolution of such communication practices by listed companies pursuant to the enactment of NFRD.

Secondly, we examine how companies react to coercive pressures and how they differ in their anti-corruption disclosure pursuant to imposed regulation. Existing studies indicate the overall positive impact of NFRD on sustainability disclosure in terms of reporting companies and the extend of published reports (Matuszak and Różańska 2021; Salento et al. 2023). Our study provides evidence for the role of corporate governance in determining company reactions to NFRD requirements, since companies falling under this legislation differ significantly in the scope of information provided in their non-financial report. We argue that anti-corruption disclosure demonstrates an organizational reaction to institutional change, and a firm’s choice of how to respond to this change is determined by selected company attributes. In particular, we draw upon institutional theory to argue that company linkages with the external environment intensify the interactions with constituencies and allow for the reproduction of shared meanings and understandings. The linkages with the external environment also exert pressure on the company via influential stakeholders, such as investors, and expose the firm to greater scrutiny by these constituencies. We use board independence and ownership dispersion as proxies for firm linkages with the external environment and indicate that these attributes determine companies’ reactions to coercive pressure in the form of anti-corruption disclosure.

The remainder of the paper is organized as follows. We start by developing the conceptual framework and discuss the phenomenon of anti-corruption disclosure as a company reaction to pressure from stakeholders who demand greater transparency and fairness. Referring to institutional theory, we outline the conceptual framework and formulate hypotheses. Specifically, we assume a positive impact of the regulation on anti-corruption disclosure, yet we suggest that the effect is differentiated by a firm’s linkages and exposure to the external environment. Next, we outline the research design, presenting the sample used in our analysis and the methodology adopted, followed by a description and discussion of our results. Our final remarks are presented in the conclusion section.

Literature review and hypotheses development

Anti-corruption disclosure

Corruption is perceived as one of the major social challenges, having a significantly detrimental impact on economic growth (George et al. 2016) and remains a complex construct that is defined in various ways in economics, anthropology, sociology and political science. It covers various taxonomies (Duho et al. 2020; Sartor and Beamish 2020), including systemic versus low-level corruption (dela Rama 2012), grand versus petty corruption (Angelucci and Russo 2022), political versus bureaucratic corruption (Lindgreen 2004), specific versus general corruption (Montiel et al. 2012) and government (public) versus corporate corruption (Castro et al. 2020). Corporate corruption as a distinctive subcategory represents the supply side of corruption and refers to illicit use of one’s position within organizations (Ashforth et al. 2008). It is defined as a state and the process of “the misuse of formal power by a corporate representative for personal and/or organization benefit” (Castro et al. 2020: 938) or the “pursuit of individual interests by one or more organizational actors through the intentional misdirection of organizational resources or perversion of organizational routines” (Lange 2008: 710). Corporate corruption is conceptualized in four different perspectives (Castro et al. 2020) as (1) a rational action resulting from cost/benefit analysis, (2) a cultural norm facilitating or inhibiting illicit behavior by companies, (3) institutionalized practice resulting from cognitive, normative and regulatory pressures, and as (4) moral failure of managers and decision makers. It covers the flow of resources (Neu et al. 2013) in the form corporate fraud, commercial bribery, collusion, kickbacks and insider trading (Sartor and Beamish 2020).

The extensive efforts to fight against corruption include, among others, regulatory and institutional changes enhancing transparency and strengthening public scrutiny. A growing body of empirical evidence indicates that corporate reporting on anti-corruption procedures adds to greater transparency and may strengthen effective strategies mitigating corruptive behaviors (Argandoña 2005; Barkemeyer et al. 2015; Sartor and Beamish 2020). Anti-corruption disclosure is viewed as a company commitment to accountability and transparency. It also constitutes a signal about principles driving company actions, which can be conveyed to constituents such as investors and customers.

Anti-corruption disclosure has been evolving in line with the recent trend of enhancing sustainability and ESG reporting, representing a reaction to the increase in stakeholder and regulatory pressure (Matuszak 2017; Previtali and Cerchiello 2023). There is a growing understanding that company performance encompasses not only financial results but also its impact on society and the natural environment, leading to a broader scope of metrics and more material topics (Sepúlveda-Alzate et al. 2021) that a firm is expected to report. Greater ESG transparency allows for a more balanced evaluation of company activity (Baldini et al. 2018), overcomes the limitations of traditionally narrow financial reporting (Gray 2010) and becomes an element of risk management (Grougiou et al. 2016) and a driver for firm value (Yu et al. 2018). Alongside sustainability/ESG reporting, “companies disclose a strategic commitment to fight bribery and corruption” (Previtali and Cerchiello 2023:3), signaling their commitment to adhering to fair rules of market activity. Moreover, Sarhan and Gerged (2023) observe that corporate anti-bribery and corruption commitments are positively associated with environmental management performance, suggesting a synergy effect of selected ESG dimensions. Anti-corruption disclosure, according to either a voluntary or mandatory framework, falls under the corporate governance section, with the standards suggesting communication of reported and confirmed incidents of corruption and legal cases against the company in question, as well as the formulation of anti-corruption policies and procedures and anti-corruption trainings for directors and employees (Sari et al. 2021).

The existing literature (Barkemeyer et al. 2015) on corruption as a social phenomenon offers both conceptual studies (Everett et al. 2007) placing corruption within the realm of class conflict, empirical case studies of individual examples of corruption (Blanc et al. 2017), and also quantitative analyses modeling the level of corruption against socio-economic and organizational determinants (Islam et al. 2021; Sari et al. 2021). Scholars recognize, however, that the existing research on anti-corruption measures, including anti-corruption and disclosure practices, remains scarce and requires further studies. Conceptually, studies explaining the phenomenon of anti-corruption disclosure on the part of companies are located within institutional theory aimed at investigating the role of coercive pressure (Islam et al. 2021). Research also makes use of legitimacy theory, which offers an insight into corporate motives for increased reporting (Sari et al. 2021), pointing at the problem of decoupling. Furthermore, studies refer to critical accounting perspectives (Islam et al. 2021), while other scholars adopt transaction cost economics (Sartor and Beamish 2020) and agency theory (Al-Okaily 2023) linking greater transparency with lower costs of operation and lower information asymmetry between the company and its constituents. Finally, a resource-based view and resource dependence theory suggest anti-corruption disclosure to be the outcome of a company’s access to know-how, expertise and the connections of its board directors (Previtali and Cerchiello 2023).

Sari et al. (2021) structure the existing literature on anti-corruption disclosure into two main streams: (1) descriptive studies which document the evolution of anti-corruption disclosure with regard to its scope and quality (Islam et al. 2017) and (2) econometric studies which attempt to understand the determinants of anti-corruption disclosure, including the coercive pressure of legislation, the institutional environment and firm-level characteristics (Al-Okaily 2023; Sari et al. 2021). In the first research stream, researchers have investigated the evolution of anti-corruption reporting in line with growing ESG disclosure and the impact of regulation (Calderón et al. 2009; Cleveland et al. 2009). However, anti-corruption disclosure is found to be less fully developed as a topic in comparison with social and environmental aspects (Issa and Alleyne 2018), thus pointing to the need for additional academic research. Moreover, studies indicate significant shortcomings in corporate practice, pointing at problems relating to decoupling (Islam et al. 2021) and impression management (Sari et al. 2021). Similar to the shortcomings in environmental reporting (Marquis et al. 2016; Neu et al. 1998; Talbot and Boiral 2018; Tashman et al. 2019), companies also tend to communicate far reaching declarations on best practice and increased accountability (in the sections concerning governance) which are not coupled with their practice in actuality (Krenn 2015; Okhmatovskiy and David 2012; Sobhan 2016). In the second research, stream studies emphasize that the scope and quality of anti-corruption disclosure, in addition to its coupling between formulated strategies and actual behavior, are strongly determined by institutional and organizational characteristics (Duho et al. 2020; Sartor and Beamish 2020). Similarly, to studies on country determinants for ESG disclosure (Baldini et al. 2018), the existing studies reveal that stronger country governance, greater media pressure and freedom of speech are positively associated with enhanced anti-corruption disclosure (Barkemeyer et al. 2015; Blanc et al. 2017). Specifically, “where press freedom is restricted and corruption is more common, the general levels of social and political pressures related to the corporate corruption issues are likely reduced” (Blanc et al. 2017: 1747), leading to a lower scope of anti-corruption disclosure by companies headquartered in such countries. Moreover, higher global country and industry pressure, in the form of stakeholder initiatives and disclosure regulation, increase the likelihood of anti-corruption disclosure (Duho et al. 2020; Faisal et al. 2022).

Moreover, studies exploring the organizational determinants of anti-corruption disclosure point to a significant role for corporate governance in constraining corruption and stimulating greater anti-corruption disclosure (Barkemeyer et al. 2015), with the emphasis put on the board of directors and ownership structure. In particular, larger board size and a greater presence of external and female directors are positively associated with anti-corruption disclosure (Previtali and Cerchiello 2023). In addition, companies characterized by government ownership are more prone to greater anti-corruption disclosure as a part of their public duties (Sari et al. 2021). However, studies on Chinese companies suggest that this positive effect may diminish when the CEO has a political background related to the government (Yin and Zhang 2019). While family ownership is found to be negatively associated with anti-corruption disclosure, the negative effect is lowered with the presence of female directors on the board (Al-Okaily 2023), greater exposure to foreign shareholders (foreign ownership) and foreign customers and business partners (international operation), thus encouraging companies toward greater transparency of their anti-corruption measures (Sari et al. 2021).

Hypotheses development

Anti-corruption disclosure evolves as a company reaction to stakeholder expectations and is a consequence of coercive pressures. In a sense anti-corruption disclosure exemplifies, a reflection of the rules and structures embedded in the environment (Issa and Alleyne 2018) and conceptually represents an organizational response to institutional change (DiMaggio and Powell 1983; Sari et al. 2021; Zucker 1987). In this research, stream scholars adopt institutional theory, which complements stakeholder theory and legitimacy theory (Sari et al. 2021), as well as a critical accounting perspective (Islam et al. 2021) to explain the process of adaptation (Scott 1987) and institutionalization of new practice (Eisenstadt 1964). In the lens of institutional theory, companies function in the field interacting with institutions understood as symbolic and behavioral systems. These systems are built from representational, constitutional, and normative rules, together with regulatory mechanisms that define the framework of common meaning and lead to the emergence of actors and action routines (Issa and Alleyne 2018). Therefore, by virtue of anti-corruption disclosure a company demonstrates its adaptation, or lack thereof, to institutional pressures meeting social norms and values (Scott 1987).

The theoretical underpinnings of institutional theory are used to investigate the corporate disclosure practice, distinguishing between decoupling and isomorphism. While decoupling explains differences in a company’s reporting and practice (Islam et al. 2021; Meyer and Rowan 1977) and is viewed as the divergence between a company’s reported efforts and actual practice, isomorphism demonstrates the convergence of organizational practice across companies (DiMaggio and Powell 1983) resulting from coercive, mimetic and normative pressures. According to the isomorphism concept (DiMaggio and Powell 1983), companies become more alike and reveal similarities in their policies and behaviors by being driven, respectively, by the impact of influential stakeholders and regulation (coercive pressure), corporate motivation to copy one’s peers (mimetic pressure) and inter-organizational transmission of norms (normative pressure). In the isomorphic process, in regards to corporate social responsibility performance companies respond to various pressures with the intention of increasing their competitiveness and gaining legitimacy from their constituencies (Zampone et al. 2022).

In particular, coercive pressures are represented by the influence of powerful stakeholders who function in the organizational field on which the firm is dependent. Such stakeholders include government and regulators, the media, important customers and suppliers, as well as certification bodies whose formal and informal impact on the organization can take the form of regulation, influence, persuasion or invitation for cooperation (Azlan and Roszaini 2011; Sari et al. 2021). The notion of coercive pressures assumes that companies react to regulation and change their practice according to rules and principles formulated by laws (Islam et al. 2021). In sum, the changes of organizational practice under coercive isomorphism result from companies’ reaction to stakeholder pressure and the adaptation to expectations of society (DiMaggio and Powell 2000; Issa and Alleyne 2018; Mizruchi and Fein 1999).

In response to pressure from various stakeholders, the scope of non-financial disclosure is increasing, including the communication of anti-corruption actions (D’onza et al. 2017; Previtali and Cerchiello 2023). Coercive pressure “is central to state legitimization in the environment-as-institution approach” (Zucker 1987: 444) and its role increases in highly institutionalized organizational fields (Greenwood et al. 2002), such as public listed companies whose operations and reporting are highly regulated. Unlike the concept of voluntary reporting, the idea of coercive pressure through effective law enforcement is seen as the next stage of institutionalization of new practice and is expected to encourage companies to increase anti-corruption disclosure (Sari et al. 2021). Mandatory disclosure may serve as both an outcome-oriented and process-oriented control of corruption (Lange 2008), contributing to conflict resolution between principals and agents (Fama and Jensen 1983; Jensen and Meckling 1976). In the former, anti-corruption disclosure constitutes incentives to align the interests of managers with those of shareholders, whereas the latter resolves conflict between principals and agents by adding to the monitoring of upper management behavior (Jensen and Meckling 1976; Lange 2008). As a result of this, anti-corruption disclosure may lower the degree of uncertainty in how a company adapts to its environment and may reduce company risk (Sartor and Beamish 2020). The “shared understanding or collective beliefs” (Greenwood et al. 2002:59) on preventing corruption and increasing corporate transparency is reinforced by regulation on anti-corruption disclosure, such as NFRD. For instance, Islam et al (2021), while observing incidents of decoupling, note that the implementation of the UK Bribery Act improves disclosure by providing support for the notion of institutional coercive pressure. Therefore, despite certain limitations (Monciardini et al. 2020) NFRD may be viewed as the first step in the institutionalization of sustainability reporting within the EU (Petruzzelli and Badia 2023; Pizzi et al. 2023). Consistent with the notion of institutional coercive pressure, we formulate the following hypothesis H1:

H1

The scope of anti-corruption disclosure increases after the implementation of mandatory non-financial reporting.

Prior studies on corruption and regulation in general, as well as on legislation on mandatory reporting in particular, suggest that coercive pressure in the form of legislation does not prove to be a sufficient mechanism to alter corporate behavior (Monciardini et al. 2020; Petruzzelli and Badia 2023). Companies differ in their response to external pressure and adopt various choices in reaction to regulation (Liu 2021). In her seminal work, Oliver (1991) proposes that in their strategic responses to institutional process companies choose from different options which include acquiescence, compromise, avoidance, defiance and manipulation. Moreover, the corporate reaction to information disclosure legislation is conceptualized not as a linear process but as irregular institutional waves of implementing a new reporting practice (Miller et al. 2017). These waves are determined by the scope of change at the initial stage of new practice implementation. Therefore, we can say that following institutional pressure companies’ “rate of change on disclosed metrics are likely to follow a tapering pattern such that improvement occurs most rapidly immediately” (Miller et al. 2017: 1016), which subsequently slows over time. Thus, the response in the context of the scope and quality of anti-corruption disclosure may be driven by the complexity of the institutional environment, the organizational determinants and the role of intermediaries (Fuad et al. 2022; Sari et al. 2021). Finally, developing on prior studies on company reactions to regulation, Luo et al. (2017) emphasize that organizational attributes impact the way firms experience institutional complexity. In particular, highly scrutinized companies which reveal multiple institutional linkages and companies of larger size both experience greater conformity to institutional pressure. While highly exposed companies exhibit rapid adoption to institutional pressure, the need for a quick accommodation of institutional demands may compromise the substantiveness of new practice implementation (Luo et al. 2017). In a similar vein to the role of institutional complexity, Liu (2021) focuses on governmental intermediaries that facilitate bridges or impose buffers between the firm and the regulator. The intermediary role can be played by market and economic institutions that specialize in professional activities (Howells 2006).

Building on the concept of organizational attributes, we posit that company scrutiny and exposure to coercive pressure by influential stakeholders, proxied by a company’s linkages with its environment, may differentiate organizational response to regulation. Firstly, numerous linkages intensify the interactions of an organization with its constituencies and permit the reproduction of shared meanings and understandings (Greenwood et al. 2002). Such interactions may be facilitated by the presence of independent directors on the board that provide access to professional knowledge (Wang et al. 2015) and function as an intermediary bridging organization (Liu 2021). Independent directors can also be perceived as institutional actors that serve as a bridge between the company and its external environment (Hillman et al. 2008; Johnson et al. 2013) and stimulate the implementation of new practices (Zattoni and Cuomo 2010). Therefore, we assume that greater board independence that demonstrates a firm’s linkages with its environment contributes to better adoption of new regulation. Put differently, independent directors and an independent chair enable the company to accommodate to new institutional pressures. Prior research on overall sustainability reporting from the US (Jizi et al. 2014; Rupley et al. 2012), Italy (Cucari et al. 2018), Latin America (Husted and Sousa-Filho 2019), and on a sample of international companies (Garcia-Sánchez and Martínez-Ferrero 2018), reveal that independent directors are positively associated with environmental and ESG disclosure, alongside CSR performance. We argue that companies with more independent boards are expected to improve their anti-corruption disclosure (Burns et al. 2021; Jaggi et al. 2021), pursuant to mandatory reporting legislation, in comparison with firms with fewer independent directors. In line with the preceding notions, we formulate the following hypotheses, H2a and H2b:

H2a

The scope of anti-corruption disclosure is higher for companies with greater linkages, as proxied by board independence, after the implementation of mandatory non-financial reporting.

H2b

The scope of anti-corruption disclosure is higher for companies with greater linkages, as proxied by an independent chair on the board, after the implementation of mandatory non-financial reporting.

Secondly, companies may differ in their reaction to new regulation in relation to coercive pressure by influential stakeholders (Azlan and Roszaini 2011). In other words, the effectiveness of mandatory non-financial reporting and its implementation by firms subject to it may be reinforced by influence from other sources such as investors (Sari et al. 2021). In particular, dispersed ownership increases the pool of stakeholders exerting pressure for greater transparency to reduce information asymmetry (Al-Okaily 2023). In addition, fragmented investors represent an influential intermediary (Liu 2021) that puts a company under the spotlight for greater scrutiny (Luo et al. 2017). With limited research available on anti-corruption disclosure and ownership structure, the reference to overall sustainability/ESG reporting appears to be consistent with our theorizing. More exposed companies are expected to better conform to institutional pressure. Studies show that concentrated ownership is viewed more in terms of a driver for increasing private access to information, while it is found to be negatively associated with social and environmental disclosure (Ntim and Soobaroyen 2013; Tagesson et al. 2009). Consequently, studies note positive effects for dispersed ownership (Brammer and Pavelin 2006; Gamerschlag et al. 2011). Therefore, consistent with the notion of coercive pressure from stakeholders, we assume that companies with greater linkages with their constituencies are more responsible to institutional pressure. We formulate the following hypothesis H3:

H3

The scope of anti-corruption disclosure is higher for companies with greater linkages, as proxied by dispersed ownership, after the implementation of mandatory non-financial reporting.

Research design

Sample

We use a sample of companies listed on the main stock exchange indices (WIG20, mWIG40 and sWIG80) listed on the Warsaw Stock Exchange over the period 2015–2019 and subject to NFRD legislation. Our final sample covers 72 companies, making a total of 360 reports included in the content analysis. Focusing on the 2015–2019 period allows us to investigate the effect of the 2017 introduced NFR Directive on mandatory non-financial reporting.

We collect data on the overall company characteristics, data on supervisory boards and information on anti-corruption related disclosure. The data on company characteristics were extracted from the Refinitiv (EIKON) base. The information on the structure and composition of the supervisory boards was manually obtained from annual reports. Information regarding disclosure of anti-corruption measures was hand collected from annual and non-financial reports.

Variables and measurement

Explained variable

The anti-corruption disclosure (ACD) index is our main explained variable. We build the ACD index on the basis of information reported by sample companies according to GRI standards. We use seven GRI standards covering anti-corruption information, as presented in Table 1.

Table 1 Variables used for the anti-corruption disclosure index
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Firstly, we use a binary variable (0 when the GRI standard is not reported; 1 when it is reported) to depict whether a given metric on anti-corruption policies from Table 1 is disclosed. Next, we built an anti-corruption index whose value for observation number t is calculated according to the following equation:

$${\text{ACD}} \;{\text{index}}_{t} = \mathop \sum \limits_{i = 1}^{7} \frac{{{\text{score}} \;{\text{ACD}} _{it} }}{{{\text{score}}\; {\text{max}}}}$$

Explanatory and control variables

To investigate anti-corruption disclosure, we employ explanatory variables on the characteristics of supervisory boards referring to the presence of independent and ownership structure. In particular, we use a binary variable depicting the presence of at least 30% of independent directors on the board (Ined30) and a binary variable denoting the presence of an independent chair (Inedchair). For ownership structure we use a binary variable that represents dispersed ownership, measured as the lack of a majority shareholder (Dispown). In addition, we use a binary variable depicting the enactment of NFRD regulation (NFRD). The explanatory variables enable us to identify the impact of mandatory non-financial reporting legislation on dimensions of disclosure with reference to the board characteristics, specifically the presence of independent directors and ownership structure. Finally, we use company-level control variables relating to the size of the supervisory board (Boardsize), company size (natural logarithm of assets: LnAssets) and financial performance (measured by return on assets: ROA). The list of variables used in the econometric analysis is given in Table 2.

Table 2 Variables used in the econometric analysis
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Methodology

We construct our models with the explained variables on anti-corruption disclosure. The explanatory variables consist of the presence of independent directors on the board within two main categories (30% share of independent directors on board; an independent chair), dispersed ownership (the lack of a majority shareholder in the ownership structure) and the enactment of NFRD legislation measured across the pre-Directive and post-Directive period. We investigate whether the presence of independent directors differentiates company reactions to mandatory reporting legislation or improves the reporting on anti-corruption measures by companies which are subject to this regulation. For this purpose, we adopt a Tobit random effect model and observe the range of ACD index censored considering a zero-inflated distribution. This allow us to control for the frequent zero-valued observations of ACD index that characterize our dataset. In adopting this approach, we examine the interaction between the enactment of the NFR Directive and certain board characteristics related to independent director participation (NFRD##Ined30; NFRD##Inedchair). As discussed in the conceptual section, we assume that once coercive pressure in the form of NFRD improves anti-corruption disclosure, company attributes regarding linkages with the environment proxied by board independence differentiate the scope of anti-corruption disclosure. Next, we follow with a model to examine the interaction between the enactment of the NFR Directive and dispersed ownership (NFRD#Dispown). Similarly to the presence of independent directors, including this interaction represents the assumption that companies with greater linkages in the form of dispersed ownership differentiate company reactions to NFRD, i.e., the scope of anti-corruption disclosure. We add variables to control for the first year of anti-corruption disclosure, board size, company size, financial performance and firm value. We employ the following models to test our hypothesis on the relation between anti-corruption disclosure and presence of independent directors on the board, the relation between anti-corruption disclosure and dispersed ownership, and the additive effect of board independence and dispersed ownership:

  • ACD index = f (NFRD##Ined30, Boardsize, LnAssets, ROA, Startyear, Sector)

  • ACD index = f (NFRD##Inedchair, Boardsize, LnAssets, ROA, Startyear, Sector)

  • ACD index = f (NFRD##Dispown, Boardsize, LnAssets, ROA, Startyear, Sector)

We also include a dummy depicting the sector of operation as a control variable and distinguish between the period before and after the implementation of mandatory non-financial reporting under the directive. For this purpose, we use a dummy variable to determine the enactment of NFRD. Calculations were run with STATA17 software.

Descriptive statistics

We provide descriptive statistics to present the overall characteristics of the sample companies in Table 3.

Table 3 Descriptive statistics (n = 72, 2015–2019)
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Table 3 shows that the reporting practice of the sample companies remains low over the analyzed period. The overall anti-corruption disclosure index is estimated at 20%. Among components based on GRI standards, the highest reporting figure of 37% is noted for ACD6 (information on the total number of confirmed incidents of corruption), while the lowest disclosure at just 5% is observed for ACD7 (information on public legal cases regarding corruption brought against the organization or its employees during the reporting period). Descriptive statistics reveal that in 80% of sample companies, the threshold of 30% of independent directors is noted in nearly half of observations, whereas in 16% of them, the independent director is the board chair. Dispersed ownership, defined as the absence of a dominant shareholder holding 30% (or more) of shares, is noted in 38% of companies.

Next, in Table 4 we present the evolution of anti-corruption disclosure over the analyzed period.

Table 4 The evolution of anti-corruption disclosure
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As presented in Table 4, we observe an increase in anti-corruption disclosure for both the value of the index and the number of reporting companies. The anti-corruption disclosure index increased from 0.04 in 2015 to 0.27 in 2019, in line with the growth of reporting companies from 8 in 2015 to 47 in 2019. In particular, the increase between 2015 and 2017 can be attributed to the enactment of NFRD. Strikingly, in the last year of observation and in the third year of NFRD in operation, 35% of sample companies did not publish any information on anti-corruption policy, which we measure in the form of anti-corruption training, the number of incidents of corruption and the number of public legal cases regarding corruption brought against the organization or its employees. 26 companies started to report in 2017, which we interpret as implementing new practice before the disclosure was legally obliged.

Next, we present the correlation matrix in Table 5.

Table 5 Correlation matrix
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Table 5 reveals the relationship between different variables concerning anti-corruption disclosure. As expected, the correlation is observed between the ACD index and being subject to NFRD regulation. We also observe a correlation between the variables on board independence and between company size and board size.

Results

Regression results

We begin by testing hypothesis H1, which assumes that there is a positive link between the introduction of NFRD and anti-corruption disclosure. Next, we verify hypotheses H2a and H2b, which assume that there is a positive association between board independence and anti-corruption disclosure after the e the NFRD implementation. The results of the Tobit panel regression models are shown in Table 6, revealing the effect of the coercive pressure of NFRD. For all three models, we see statistically significant and positive associations, thus providing support for hypothesis H1.

Table 6 Results of the Tobit panel model estimation on anti-corruption disclosure and the enactment of NRFD legislation, in relation to board independence and dispersed ownership
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Next, we verify hypotheses H2a and H2b. Hypothesis H2a assumes that the scope of anti-corruption disclosure is higher for companies with greater linkages, as proxied by board independence, after the implementation of mandatory non-financial reporting. In hypothesis H2b we expect that the scope of anti-corruption disclosure is higher for companies with greater linkages, as proxied by an independent chair on the board, after the implementation of mandatory non-financial reporting. The results of the Tobit regression models are shown in the second and third column of Table 6 for two of the adopted board independence measures—the presence of at least 30% of independent directors on the board and the presence of an independent chair on the board.

As shown in Table 6, the analysis reveals a statistically significant and positive association between the presence of at least 30% of independent directors and anti-corruption disclosure and between the presence of the independent board chair and anti-corruption disclosure, following the implementation of NFRD. The interaction term between NFRD and the variable for board independence is statistically significant for both of the measures employed—the presence of at least 30% of independent directors and the presence of an independent board chair. The results indicate that companies with more independent boards are more prone to anti-corruption disclosure after the introduction of the NFR Directive. These findings provide support for hypotheses H2a and H2b and indicate that the presence of independent directors or of an independent chair differentiate a company’s reaction to anti-corruption disclosure following the introduction of mandatory reporting legislation.

Next, we test hypothesis H3, which assumes that there is a positive link between the enactment of non-financial reporting legislation and anti-corruption disclosure in companies characterized by dispersed ownership. The results are shown in the last column of Table 6 and reveal a statistically significant and positive association between dispersed ownership and anti-corruption disclosure in the post-NFRD period. Another finding which emerges from this model is that the interaction term between NFRD and the variable on dispersed ownership indicates that the scope of anti-corruption disclosure increases more after the introduction of the NFR Directive in companies characterized by the absence of a majority shareholder (who holds at least 30% of shares). This result provides support for hypothesis H3.

Robustness checks

We run additional models to check whether the observed relationships remain stable. As a robustness check, we adopt a difference-in-differences approach to examine the interaction between the enactment of the NFR Directive and certain board characteristics related to independent director participation (NFRD##Ined_30; NFRD##Inedchair). Next, we follow with a difference-in-differences approach to examine the interaction between the enactment of the NFR Directive and dispersed ownership (NFRD#Dispown). We use a difference-in-difference analysis with fixed effects, since we are studying the panel of the population of WSE companies listed in the main indices that were subject to NFRD for the period 2015–2019. The natural assumption was to use the fixed effects panel model, grouped by company to control for individual company effects. This approach allows the internal company variability of board size and company size to be captured, as well as the financial performance, and to relate the changes in anti-corruption disclosure with the presence of independent directors on the board. We do not include the sector of operation as a control variable, since the sector was constant for each company during the entire period of its observation and thus could not be included in the fixed effects panel model. Put differently, the sector effect is fully incorporated in the estimated individual effect for each company. We distinguish between the period before and after the implementation of mandatory non-financial reporting under the directive. The results of the robustness tests are shown in Table 7.

Table 7 Results of robustness tests on anti-corruption disclosure and the enactment of NRFD legislation, in relation to board independence and dispersed ownership
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As shown in the second and third column in Table 7, there is a statistically significant and positive improvement in anti-corruption reporting after the implementation of NFRD for companies which have at least 30% of independent board directors or have an independent board chair. The last column in Table 7 shows that companies with dispersed ownership are also more prone to disclose anti-corruption information in the post-NFRD period. This evidence shows that greater board independence and ownership dispersion is associated with improved anti-corruption disclosure in the wake of NFRD legislation and that it remains consistent with our base models.

Discussion and conclusion

Business and society are facing significant challenges responding to the climate crisis and social inequalities and are consequently taking actions that require adequate policy, responsible leadership, efficient allocation of resources and the integrity of all decision makers. The effectiveness of these actions can be only achieved under the conditions of a corruption-free environment where fair rules and transparency prevail and drive company behavior. However, in light of the globalization of economic activity, corruption still remains an international phenomenon (Neu et al. 2013) in which firms may engage to obtain access to limited resources, enter attractive markets, increase market share, gain contracts and speed up the decision-making process by their constituencies and business partners (Nobanee et al. 2020).

With the increasing level of ESG transparency, which reveals the impact of corporations on society and the environment, stakeholders demand more information on firm anti-corruption measures and perceive anti-corruption disclosure as an integral part of sustainability reporting (Branco and Matos 2016; Matuszak and Różańska 2021; Sari et al. 2021). The communication of anti-corruption measures serves as a firm’s commitment (Kowalczyk-Hoyer 2012) to prevent bribery and illegal payments, intended as a signal to its customers and investors. However, prior research gives rise to criticism about the quality of reports, the comparability and credibility of the information provided (indicating the practice of impression management), strategic manipulation, façade building and decoupling in the case of overall ESG reporting in general (Marquis et al. 2016; Neu et al. 1998; Talbot and Boiral 2018; Tashman et al. 2019), and corporate governance (Krenn 2015; Okhmatovskiy and David 2012; Sobhan 2016) and anti-corruption disclosure in particular (Blanc et al. 2019; Islam et al. 2021; Schembera and Scherer 2017). As a result, while the existing literature raises some concerns on the effectiveness and credibility of anti-corruption disclosure (Aerts and Cormier 2009; Cho et al. 2017), there is growing evidence showing that reporting anti-corruption procedures may prevent corruptive behaviors (Argandoña 2005; Barkemeyer et al. 2015; Sartor and Beamish 2020).

In this paper, we draw upon institutional theory and perceive the scope of anti-corruption disclosure as a firm’s response to coercive pressures (DiMaggio and Powell 1983; Sari et al. 2021; Zucker 1987), representing a company’s reflection of the rules and structures in the environment (Issa and Alleyne 2018). As companies interact with institutions (defined as symbolic and behavioral systems), they strive to meet social norms and values (Scott 1987). In other words, companies decide on how they adapt to the systems of representational, constitutional, and normative rules (Issa and Alleyne 2018; Richard Scott 1987) and choose their reactions to external pressures in the form of anti-corruption disclosure and practice, ranging between decoupling and isomorphism (DiMaggio and Powell 1983; Islam et al. 2021; Meyer and Rowan 1977).

Our study contributes to the existing literature in two ways. Firstly, we add to the limited evidence on anti-corruption disclosure by investigating the role of coercive pressure imposed by NFRD. Unlike prior studies on anti-corruption disclosure focusing on voluntary reporting, this paper documents the impact of NFRD implementation on the scope of anti-corruption disclosure adding to scare literature in this area (Matuszak and Różańska 2021). While NFRD leaves a lot of discretion to companies regarding the reporting standards, it represents the first attempt in the EU to formally require the self-disclosed information on anti-corruption practices from those companies subject to it. In exemplifying coercive pressure by influential stakeholders (Azlan and Roszaini 2011), NFRD may contribute to the institutionalization of sustainability reporting (Islam et al. 2021; Petruzzelli and Badia 2023; Pizzi et al. 2023) as a shared understanding of the value of transparency (Greenwood et al. 2002). Our study is purposefully focused on companies listed on the Warsaw Stock Exchange, which revealed significantly limited disclosure in the pre-NFRD period (Aluchna et al. 2019). The analysis reveals a positive and statistically significant association between NFRD implementation and the scope of anti-corruption disclosure. We note a rise in the number of companies reporting anti-corruption measures, as well as the growing scope of anti-corruption disclosure as measured by items according to GRI standards. The results are consistent with the notion of institutional coercive pressure (Islam et al. 2021) by influential stakeholders (D’onza et al. 2017; Previtali and Cerchiello 2023).

Secondly, we add to the debate on the importance of organizational attributes for understanding (Sari et al. 2021) different company choices in their reactions to institutional change brought buy mandatory reporting legislation of NFRD (Lippai-makra and Kov 2022; Salento et al. 2023). The existing literature offers various perspectives on the evolution of corporate reporting, emphasizing the role of intermediaries (Fuad et al. 2022; Liu 2021; Sari et al. 2021) and the complexity of the institutional context (Luo et al. 2017) to explain firms’ reactions to external pressure. Adding to the debate, we argue that linkages between the firm and its environment may differentiate organizational response to regulation and determine the scope of anti-corruption disclosure after NFRD implementation. The linkages proxied by board independence and dispersed ownership increase company interactions with (and reliance upon) its constituencies. As a consequence, linkages with the external environment expose the company to greater scrutiny and coercive pressure by influential stakeholders. Therefore, they transmit and strengthen the reproduction of shared meanings and understandings (Greenwood et al. 2002). The analysis reveals a positive and statistically significant interaction between all proxies for linkages (30% of independent directors on board, independent board chair, dispersed ownership) and NFRD in relation to anti-corruption disclosure. Put differently, the analyzed firm linkages differentiate company reactions with regards to anti-corruption disclosure after the enactment of mandatory non-financial reporting legislation. In conclusion, while our findings are consistent with prior studies on voluntary disclosure (Burns et al. 2021; Jaggi et al. 2021), they (1) indicate companies’ reactions to mandatory reporting regulation and (2) reveal that these reactions are differentiated by selected organizational attributes. Moreover, the linkage perspective offers a wider view on company characteristics that is coherent with the main assumptions of institutional theory.

Our study reveals some limitations that could be addressed by further studies. Firstly, we use a single-country sample limited to two years prior to and three years subsequent to the enactment of NFRD. Researchers are encouraged to investigate whether the positive effect of the coercive pressure is observed in other EU members states or other countries which introduced mandatory non-financial reporting. In addition, expanding the measures of company linkages, understood as company openness to the external environment or the presence of an intermediary that bridges the company with its environment (Liu 2021), could identify attributes that strengthen firm adoption to institutional changes and contribute to the transmission of good practice. Secondly, we deliberately limit our analysis to the effect of coercive pressure upon anti-corruption disclosure. In light of the need for understanding the effectiveness of implemented regulations, the next step in the academic studies should cover assessment of the level of corruption pursuant to increased disclosure.

Our study offers policy implications indicating potential shortcomings in mandatory reporting regulation. Despite the introduction of NFRD and the incorporation of its guidelines into the legislation of EU member states, nearly 35% of companies did not report any information on anti-corruption measures in 2019. This suggests the limited role of regulation (Petruzzelli and Badia 2023; Pizzi et al. 2023) and isomorphic mechanisms (DiMaggio and Powell 1983) for the practice of sustainability reporting. Policy makers may consider introducing additional measures to improve law enforcement and enhance the content of non-financial reporting.