Measuring and Explaining Corporate Transparency and Business Integrity Practices in Low-Income Countries

Corporate transparency (CT) and business integrity (BI) are key success factors for medium-sized high-growth firms around the world. Moreover, policymakers and investors argue that a lack of CT/BI is the number one reason why medium-sized firms are unable to access the financing needed for rapid growth. For example, capital by development finance institutions (DFIs) and other investors with high integrity standards or requirements often does not flow to medium-sized firms because of their limited ability to produce and disclose information and a host of corporate governance risks. These issues are especially salient in low-income countries, where corporate information environments are opaque and firms face little regulatory oversight. In this project, the researchers comprehensively measure CT/BI for approximately 1,500 medium-sized firms in low-income countries in Africa, Asia, and Latin America using an innovative survey tool they have developed and piloted already around the world.

For this project, the researchers will be conducting an international survey, with PEDL supporting the survey efforts in Africa and South Asia. The goal of the survey is to comprehensively measure CT/BI practices and associated adoption frictions from the bottom up using highly detailed face-to-face interviews with finance and accounting managers of medium-sized firms between 100 and 1000 employees. The survey will consist of open-ended as well as closed-ended questions inspired by the methodology of the World Management Survey. They then plan to benchmark their findings to similar data collected for firms in the US and other European countries.

This project will be of strong interest to Development Finance Institutions, such as British International Investment (formally CDC), the World Bank’s International Finance Corporation, and other regional and national DFIs, given their substantial reliance on research outputs for policy reports and recommendations. The researchers expect the survey results to provide a benchmark against which DFIs can compare potential investees. Additionally, with respect to the academic literature, in terms of measuring corporate transparency and business integrity, this project will be a major contribution and relevant to several bodies of literature at the intersection of economics, finance, and accounting. Moreover, this project would be a first study on CT in a low-income country context and looking at medium-sized firms, for which financing frictions due to a lack of transparency are arguably most severe.



Emanuele Colonnelli

University of Chicago

Thomas Rauter

University of Chicago