Examining how Finance and Accounting Majors and Experts Spot Corruption

Abstract

Corruption has long been a captivating subject of investigation, although it also presents a substantial difficulty. The term „corruption” is often associated with a bad perception among individuals. However, delving into its underlying substance may prove to be very intriguing, offering valuable insights and opportunities for learning. Currently, there is a heightened degree of interest around this subject, which extends beyond the realm of academic study to include international corporations. The objective of this study is to elucidate and comprehend the existence of corrupt associations between two individuals, while also providing a clear definition of this notion. A survey was conducted among a sample of 120 individuals including students majoring in finance and accounting, as well as workers who have graduated in this profession. The survey used a vignette assessment technique. The objective of our study was to assess the perceptions of students and professionals in this particular subject about the intricate phenomena of societal dynamics inside their daily interactions.

Keywords: corruption perception, finance- accountancy students

Introduction

The study of corruption has long been a compelling area of research, as it presents significant challenges in terms of investigation, comprehension, and the examination of its intricate associations. This is primarily due to the potential for researchers’ preconceived notions and biases to inadvertently influence the collection and analysis of data, as well as other facets of the research endeavor.

Notwithstanding the obstacles, there is an increasing interest in the subject matter due to its impact on the perception of economic performance, investment climate, and other facets of the economy, which are contingent upon the extent of corruption prevalent inside the nation.

The interpretation of the repercussions of corruption, as outlined in the standard economic method, may sometimes be challenging. Nevertheless, it is possible to identify commonalities across many definitions of corruption.

Corruption is often seen as a manifestation of power abuse or discriminatory behavior. The majority of literature and scholarly works pertaining to corruption often start with an analysis of its conceptualization. According to a widely referenced and often used definition, corruption may be defined as the conduct shown by public officials that deviates from established standards with the intention of advancing personal objectives. According to Huntington (2017),This assertion is substantiated by the observation that the so-called „accepted norms” have a tendency to evolve with time.

The precise delineation of corruption is sometimes subject to ambiguity. Diverse interpretations of standards exist across various contexts and temporalities. Nevertheless, a prevailing perspective consistently posits corruption as a mostly unfavorable phenomenon, consistently associated with deviant conduct.

The significance of acknowledging the assessment of corruption lies in its pivotal role in evaluating the issue, wherein this assessment is profoundly shaped by economic, social, political, and cultural elements, as well as the milieu inside the workplace.

In the present research, our focus is in examining the correlation between students engaged in the study of financial and accounting procedures, specifically pertaining to investigation, analysis, and documentation, and their attitudes towards corruption as a prevalent phenomenon. Additionally, we want to determine the amount to which these students distance themselves from engaging in corrupt practices.

Conceptual approach to corruption, literature

The existing body of literature often makes a distinction between farmers residing in nations characterized by either low or high living conditions. A lower standard of living, attributed in part to below-average income, and unfavorable working conditions offered by employers contribute to an increased likelihood of corruption. Conversely, in more advanced societies characterized by higher income levels, corruption is perceived as an isolated occurrence rather than a pervasive phenomenon (Afonso et al., 2022).

The persistent problem of combating corruption is a matter of concern across many demographic groups (Takács et al., 2011), and is being examined and characterized in several domains. The delineation mechanism is a fundamental phenomenon that is essential to ascertain and delineate in order to comprehend the operation of this intricate social phenomenon.

Given that corruption is prevalent in society across all socioeconomic strata, it is imperative to address its detection and prevention at various levels.

The concept of corruption is subject to varying interpretations among individuals. The concept and perception of corruption may exhibit significant variation across different countries, societies, and individuals. This divergence is seen in the diverse interpretations of corrupt practices, such as the inclusion of presents to teachers or physicians within the realm of corruption. The intricacy of corruption is also examined using advanced modeling techniques in academic research. Scholars often conceptualize corruption as a violation of the distinction between the public and private sectors, and as a manifestation of principal-agent or collective action models (Mungiu-Pippidi, 2015).

The prevalence of theoretical research techniques outweighs that of empirical investigations, mostly attributed to the sensitive nature of the subject matter. The measurement and assessment of corruption, along with its associated societal impact, pose significant challenges due to its covert nature, limited public visibility, and limited accessibility for academics. However, there have been various endeavors to measure the extent of the harm produced by this phenomenon. Numerous globally acknowledged institutions consistently release various metrics and proxy indicators to assess different aspects (e.g., Transparency International’s Corruption Perceptions Index, the World Bank’s Annual Report on Anti-Corruption, the United Nations Development Programme’s Integrity Index, the Bertelsmann Stiftung’s Bertelsmann Transformation Index, Freedom House’s Freedom in the World report, the European Union’s Anti-Corruption Report, Global Integrity’s The Global Integrity Report, the International Budget Partnership’s Open Budget Index, and the World Economic Forum’s Global Competitiveness Report).

The level of tolerance for corruption shown by college students is a significant factor in determining their potential effect on combating corruption in the future. If students possess a strong antipathy to corruption and exhibit a diminished tolerance for corrupt practices, it may be inferred that the likelihood of encountering corruption in the future will be elevated. Consequently, once graduating from college, these individuals are inclined to actively evade corrupt circumstances and may even vehemently renounce corruption as a whole.

The existing body of research substantiates the notion that students exhibit a significant degree of concern towards contemporary instances of corruption inside business schools. They have a limited capacity for tolerance and a significant level of engagement in anti-corruption efforts in response to diverse instances of corruption. In the course of their academic pursuits, individuals have a firm conviction that they possess a capacity to endure various forms of unethical conduct, but with a tendency to steer clear of questionable circumstances that may implicate them in a corrupt capacity (Dai, 2014).

In our perspective, the propensity of college students to exhibit low tolerance towards corruption and their strong inclination to engage in anti-corruption efforts serve as foundational elements for the advancement of future anti-corruption endeavors.

According to Gutmann et al. (2020), empirical evidence indicates that individuals who actively engage in corrupt activities exhibit significant cognitive biases due to their heavy reliance on personal intuitions. Consequently, their perceptions of corrupt behavior are heavily influenced by their own negative experiences encountered within such contexts.

This process also influences the vulnerability to corruption. The behavior of people is influenced and perpetuated in a mutually reinforcing manner by negative experiences and susceptibility to corruption. There exists a need for additional investigation to examine the connections at the individual level. The objective of this study is to acquire a more profound comprehension of the associations between susceptibility to corruption, associated experiences and behavior, and to further investigate the influence of cultural traits on individuals’ perceptions of corruption.

Methodology

Research questions, hypotheses

We suspect that ethical and responsible behaviour is mentioned as a concept among students of accounting in universities, as it is embedded in the subjects (ethical company, business ethics, responsible and sustainable management). We would like to compare the attitude towards corruption, among students who have only studied finance and accounting from a book and are therefore likely to encounter only a descriptive corruption situation as a theory, with employees who, after their finance and accounting studies, are already working in either a small SME sector or a multinational company with a very complex network.

Q1: Is there a difference in the susceptibility to corruption between students of finance and accounting and graduates of this field?

H1: The attitude of university students towards corruption is changing in the labour market.

Data collection

In the course of our investigation, we conducted a survey targeting individuals affiliated with universities as students and employees, as well as those employed in either domestically owned companies, multinational corporations, or the public sector. The survey was administered via direct mail, employing the methodology outlined in a previous study conducted in 2023. Participants were requested to evaluate a set of 20 vignettes, each depicting a scenario involving corruption. These vignettes were assessed based on the four criteria outlined in the aforementioned methodology.
– The extent to which individuals perceive corruptive behavior as acceptable (acceptance)
– The probability of individuals exhibiting similar behavior in a comparable scenario (action)
– The likelihood of individuals engaging in the same behavior in a given situation (acceptance)
– The likelihood of individuals behaving in a similar manner in a specific context (action)
This article centers on the assessment of the level of acceptance among the 400 individuals comprising the researched group, using the retrieved numerical data. The study focuses on four distinct demographic categories, namely students pursuing financial accounting and personnel employed by either locally owned or global companies.

Research model

1. Nature of the advantage to be gained through corruption:
– Material gain (A): in the course of a corruption transaction, the initiator of corruption acts corruptly in the hope – or even expecting – to gain a benefit in kind or other (non-financial, non-time-earning, non-influence-gaining) advantage or profit.
– Temporal benefit (I): in a corrupt transaction, the initiator of corruption acts corruptly in the hope – or expectation – that he will gain some temporal benefit.
– Directly non-productive (annuity) benefit (J): in the course of a corrupt transaction, the initiator of corruption acts corruptly in the hope – even expecting – that some financial benefit will accrue, but the activity would still be carried out without the corrupt act, only an improvement in its quality is expected. So it is not because of „our” activity that the activity is created, hence the direct call it non-productive.
– Influence (B): in a corrupt transaction, the initiator of the corruption acts corruptly in the hope – or even expectation – that there will be a positive change in his/her position of power (even through information advantage), in order to better represent his/her own interests.

2. The environment (sector) in which corruption is committed:
– In a private-to-private investigation, individuals are not business partners, nor is a close long-standing acquaintance assumed, but only the existence of a corrupt situation for mutual benefit.
– In the case of an investigation in a business setting/relationship, the two business parties are in a situation that could result in a competitive advantage or even an objective financial position.
– A process involving a public/governmental actor may result in either a better competitive advantage or, in the case of investments, a more positive assessment.

3. Frequency of the act of corruption:
– One-off: ad hoc, irregular, unpredictable, unplanned corruption.
– Regular, predictable corruption, where the two parties commit corruption on a monthly or even weekly basis to benefit each other.

4. Level of severity of corruption:
– Mild level, which almost often means only acquiring more positive judgements
– Medium level refers to corruption processes with a demonstrable profit motive.
– At the gross level, where the parties put each other in a persistently positive position, whether in a tender negotiation or a business acquisition negotiation.

Composite variables

– An indicator of situations involving material gain and their average. [AT_E: Financial, acceptance] This refers to situations where the subject pays a financial contribution to avoid an unfavourable situation, e.g. if someone parks without paying a fee or if a company puts out a tender so that the contractor to whom it wishes to award the contract has already been identified.
– Time-advantage situations and their average is an indicator. [IT_E: Time, acceptance] In this case, the person committing the corruption pays to gain a time advantage, e.g. if someone can buy a ticket to an event before the official ticket sales date, or if you want to reduce the annual waiting time on a medical waiting list to months.
– An indicator of situations that are advantageous for the annuity and their average. [JT_E: Annuity, acceptance] In the hope of receiving regular extra income, what we call here income, the corrupt person pays to obtain it wrongfully for himself: In the case of students, the purchase of a student card has recently become quite common, The benefit purchased has given the person the opportunity to redeem a discounted ticket or season ticket.
– An indicator based on the average of the situations in which the person was able to benefit in terms of influence. [BT_E: Influence, acceptance] Influence, whether in the business or private sector, can be easily converted into money and is therefore perhaps the most influential of all the variables. Whoever gains influence can influence both the money time and annuity factors.
– The private sector in terms of benefit-gaining situations and their average is an indicator. [MT_E: Private sector, adoption]
– An indicator of situations that are advantageous from a business perspective and their average. [UT_E: Business sector, acceptance]
– An indicator of situations that benefit the government and their average. [KT_E: Business sector, acceptance]
– An indicator of the frequency of one-off benefit situations and their average. [ET_E: one-off benefits, acceptance]
– An indicator of the frequency of regular benefit situations and their average. [RT_E: one-off benefit, acceptance]

Research results

Our tables present in detail the willingness of the four demographic groups to accept the corruption situations we simulate. The vignette used for the study fully covers real-life situations while rating them on a scale of 1 to 9.

The data in the first table show that public sector workers show a higher propensity to accept corruption than university students, based on composite variables by time.

Analysing the data further, we see that acceptance by income and influence is equally distributed across the four demographic groups, but compared to expectations, acceptance of material corruption is lowest for all groups, and within all groups, it is lowest for university students.

Keeping the demographic groups, the workers currently in employment were grouped into three sectors, private, business and government. Based on the data, the response gives small variations, with the government and private sectors being the most accepting of corruption situations, while the business sector is the most rejecting.

No significant difference is found between the attitudes of university students and the other three demographic groups surveyed. Students’ perceptions of corruption are almost identical in the government and private sectors, with a tiny difference.

We wanted to assess the prevalence of corruption among the above-mentioned population. Examining the data, we see that the composite variables range between almost identical values.

Public sector employees are the least accepting of systematic corruption, while they are the most tolerant of one-off cases. University students had a completely opposite view of regular and one-off corrupt activities compared to the aforementioned demographic group. The group of domestic and multi-company employees have almost the same level of judgement about the frequency of corruption.

Conclusions

In our research, we sought to answer the question of whether the susceptibility to corruption of accounting students differs from that of accounting graduates. The fourth figure summarises the data for the four demographic groups studied across the nine composite variables we chose. The unified picture is difficult to analyse since the groups were uniform in their acceptance of corruption situations, but smaller attainments are visible.

Of the indicators, the groups were most dismissive of corruption in the business sector, while the groups were most accepting of situations that involved time gain. The university students’ perceptions of corruption situations were almost identical to the acceptance scores of private and business sector workers. Only the values of public sector workers show striking differences.
Based on our study findings, it can be inferred that there exists a resemblance between university students and graduates who have been employed in prominent global corporations with regard to their opinions of corruption. However, notable distinctions emerge when comparing these groups to those who have worked in local enterprises or within the public sector. This implies that the impact of the multinational environment on students’ perceptions towards corruption is comparatively lower when compared to domestic-owned enterprises or the public sector. Therefore, it is only possible to partly accept our idea.

The study has some limitations; however, we want to address them in future studies by doing more extensive analyses of the database using advanced statistical techniques. Specifically, we intend to conduct more comprehensive comparisons of the four demographic groups across other dimensions.

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Csaba Kerékgyártó PhD. student
Doctoral School of Entrepreneurship and Business

Dr. habil. Richárd Kása Senior research fellow
Budapest Business School- Faculty of Finance and Accountancy

Dr. Avornicului Mihai, Associate professor
Babeş-Bolyai University, Cluj-Napoca, Department of Economics and Business Administration Hungarian Institut

Dr. Róbert Tóth PhD, Senior Lecturer,
Institute of Economics and Management, Faculty of Law
of the Károli Gáspár University of the Reformed Church in Hungary