Transparency about corruption: too good to be true?

(1)

A study about the level of transparency on corruption by three

categories of Dutch companies by the use of a content analysis

Transparency about corruption:

too good to be true?

Student:

Bryan Doorten

S3025802

Supervisor:

Prof. dr. D.A. de Waard RA MA

Co-assessor:

Prof. dr. I.J.J. Burgers

Groningen, June 12, 2017

(2)

Transparency about corruption:

too good to be true?

A study about the level of transparency on corruption by three categories of Dutch

companies by the use of a content analysis

Master Thesis Accountancy & Controlling – Track Accountancy

Faculty for Economics and Business

University Groningen

Name Bryan Doorten

Student number S3025802

E-mail b.doorten@student.rug.nl Supervisor Prof. dr. D.A. de Waard RA MA

Co-assessor Prof. dr. I.J.J. Burgers

Date Groningen, June 12, 2017

(3)

ABSTRACT

Despite a lot of international and national rules and regulations to fight corruption, there have been several examples of corruption scandals by global companies in recent years which have damaged the confidence of the social public. Unfortunately, examples of Dutch companies are no exception. An important way to fight corruption is transparency. However, it is not clear yet if three categories of Dutch companies, i.e. state-owned companies, organisations of public interest and listed companies, are transparent about corruption in their sustainability report or annual report. In this explorative study, 45 reports of the reporting year 2013 and 45 reports of the reporting year 2015 have been examined by using a descriptive and interpretative content analysis. Therefore, an assessment tool is developed based on the United Nations Global Compact and the Transparency Benchmark 2016.

Some remarkable results appeared. First, the number of organisations that have reported information about corruption has not increased between 2013 and 2015. Secondly, the current degree of transparency about corruption has not been improved between 2013 and 2015, while the average score of these companies has improved in the Transparency Benchmark 2016 (reporting year 2015) compared to the Transparency Benchmark 2014 (reporting year 2013). Finally, not one company has received the maximum number of points of the assessment tool. An explanation for these remarkable results could be that the license to operate is more important than disclosure of all relevant information about corruption to the stakeholders of the company. Another explanation is that the pressure from institutions is not strong enough to be (entirely) transparent about corruption. Therefore, one of the possibilities to win the fight against corruption are mandatory reporting guidelines.

(4)

FOREWORD

In 2004, my student career started at the Dr. Nassau College Penta secondary school in Assen. Now, thirteen years later my period of full-time studying will end with the completion of this thesis as part of the Master Accountancy at the University of Groningen. The past five months, writing this thesis and carrying out the underlying investigation, were very interesting, but sometimes difficult too. I could not have written this thesis without the help of several people. Therefore, I would like to thank them before you start reading my thesis, because these people have directly or indirectly contributed to the completion of this thesis.

First, I would like to thank my supervisors of the University of Groningen, Dick de Waard and Leo Wielens, for the good input and clear feedback which I have received while writing my thesis. They have given me useful and quick advice by sending answers to my mails or during the thesis workshops. The tight deadlines of the supervisors have also helped me to prevent delays in writing my thesis.

Second, the auditor company PwC Groningen was important for me, because I could use the facilities of their company to write my thesis. Furthermore, I met my future colleagues, who were interested in the subject of my thesis and asked questions about it. In particular, I would like to thank my PwC coach, Angela van Teijen, for her useful feedback and critical eye during the last five months. I would also like to thank Hendrik and Janieke, who were also writing their thesis at PwC Groningen for the pleasant time at the office.

Third, my former colleagues of Sport 2000 van Leeuwen and my current colleagues of the institute ‘Financial Economic Management’ of the University of Applied Sciences Groningen also deserve a thank you for their interest in the progress of my thesis. In addition, they have created a fun diversion during the last five months.

Fourth, I would like to thank my classmates Bastiaan, Marion, Romke-Sytse and Sybren for the enjoyable last two years of studying at the University of Groningen. Furthermore, I would like to thank Sjoerdtje, who was also part of the same thesis group, because we have been helping each other with questions and brainstorming during the last five months.

Fifth, my friends also deserve a thank you. Especially, I would like to thank Annemarie, Brian, Nena and Tessel to hear out my stories about the thesis and the fun times we had together. My family is also important for me. So I would like to thank them for their involvement. Perhaps the most important people who deserve to be mentioned here are my parents and Jelmer. My parents have always given me the opportunity to study. Moreover, they have always motivated and supported me in everything I do. Last but not least I would like to thank Jelmer, because he is very important for me. We have fun together and help each other in whatever we are doing. I hope this will continue for a long time to come.

Finally, I would like to wish you pleasant reading. Groningen, June 12, 2017

(5)

-LIST OF ABBREVIATIONS

AFM Authority for Financial Markets CSR Corporate Social Responsibility GRI Global Reporting Initiative

OESD Organisation for Economic Cooperation and Development OPI Organisation of Public Interest

SR Sustainability Reporting TB Transparency Benchmark UK United Kingdom UN United Nations US United States

LIST OF TABLES

Table 1 Distribution of 22 Reporting Elements

Table 2 Results of the first analysis at an aggregate level Table 3 Overview of Dutch state-owned companies Table 4 Overview of Dutch organisations of public interest Table 5 Overview of Dutch listed companies

Table 6 Interpretative framework of theories

Table 7 Results of the first analysis: best five, middle five and worst five companies at an aggregate level

Table 8 Results of the first analysis in detail

Table 9 Results of the second analysis in detail regarding 2013 Table 10 Results of the second analysis in detail regarding 2015

LIST OF CHARTS

Chart 1 Scores category ‘Commitment & Policy’ state-owned companies Chart 2 Scores category ‘Commitment & Policy’ organisations of public interest Chart 3 Scores category ‘Commitment & Policy’ listed companies

Chart 4 Scores category ‘Implementation’ state-owned companies Chart 5 Whistleblowing policy at state-owned companies 2013 Chart 6 Whistleblowing policy at state-owned companies 2015

Chart 7 Scores category ‘Implementation’ organisations of public interest Chart 8 Whistleblowing policy at organisations of public interest 2013 Chart 9 Whistleblowing policy at organisations of public interest 2015 Chart 10 Scores category ‘Implementation’ listed companies

Chart 11 Whistleblowing policy at listed companies 2013 Chart 12 Whistleblowing policy at listed companies 2015 Chart 13 Scores category ‘Monitoring’ state-owned companies Chart 14 Scores category ‘Monitoring’ organisations of public interest Chart 15 Scores category ‘Monitoring’ listed companies

Chart 16 Total scores of all companies regarding reporting year 2013

Chart 17 Total scores of all companies regarding reporting year 2015 Chart 18 Difference transparency about corruption between 2013 and 2015

(8)

1. INTRODUCTION

This chapter starts with the focus of this study, which consists of the problem statement, practical relevance, purpose, significance and the research question. Thereafter, the scientific contribution will be explained. This chapter ends with a thesis outline, which gives a preview of the remaining chapters.

1.1 Focus of this study

“While the threat of corruption has not declined in significance since 2005, the world is better equipped to fight it than ever before” (United Nations Global Compact, Transparency International & International Business Leaders Forum, 2011:4). This does not relate to various global scandals, examples of which are the former president (Sepp Blatter) of the Federation International de Football Association who was suspended for six years because of corruption1 and the pharmaceutical company GlaxoSmithKline which bribed doctors, hospitals, health organisations and officials in China2. Therefore, corruption has attracted a lot of attention worldwide as a cultural, political and economic theme in recent years (Zhao, Kim & Du, 2003; Karmann, Mauer, Flatten & Brettel, 2016). Transparency International has defined corruption as “the abuse of entrusted power for private gain” (United Nations Global Compact et al., 2011:10).

It is not clear yet if rules and regulations worldwide, like (1) the Anti-Bribery Convention of the Organisation for Economic Cooperation and Development (OECD), (2) United States (US) Foreign Corrupt Practices Act and (3) the United Kingdom (UK) Bribery Act really help to fight against the threat of corruption. Three recent developments have reinforced this. First, companies still find it difficult to adopt a correct attitude against corruption (Control Risks, 2014). Secondly, there is a worrying difference between behaviour in practice and anti-corruption programs that have been established by the headquarters of companies (Control Risks, 2014). Thirdly, corruption is more common in developed countries compared to developing countries (OECD, 2014). However, in Europe (with multiple developed countries) only 37% additional resources have been deployed by international companies against corruption3. The chairman of Anticorrp (a partnership of 20 scientific institutes, supported by the European Union) also indicates that corruption is a growing problem in Europe.4

As part of Europe, corruption also gets attention in the Netherlands. Although the Netherlands is one of the least corrupt countries in the world5, it does not mean that Dutch companies are immune to corruption. On the one hand, the possibility exists that Dutch companies do business in countries where corruption occurs, because Dutch companies are responsible for 3.1 percent of all global exports (Transparency International Nederland, 2016). On the other hand, companies which operate in the Netherlands could use corruption, although it is a developed country. Recently, there have been several developments in the Netherlands to prevent and fight against corruption, like (1) an in-depth investigation of the Dutch Bank into the risk management to prevent corruption6, (2) a platform of the government to constantly discuss the results of international anti-corruption evaluations (Tweede Kamer der Staten-Generaal, 2015), (3) a guideline about how Dutch companies can do business honestly (Ministeries van Buitenlandse Zaken, Veiligheid en Justitie en Economische Zaken, ICC Nederland, VNO-NCW & MKB-Nederland, 2017)and (4) guidelines about how banks, insurers and pension funds can fight corruption risks (De Nederlandsche Bank, 2014; De Nederlandsche Bank, 2015). However, there are still examples of corruption scandals of Dutch listed companies, e.g. SBM Offshore7 and Ballast Nedam8, and non-listed companies, like state-owned companies such as The Port of Rotterdam9 and Dutch Railways10, and organisations of public interest e.g. ING and the Amsterdam Trade Bank.11

1

http://www.volkskrant.nl/sport/sepp-blatter-krijgt-schorsing-van-6-jaar-niet-ongedaan-gemaakt~a4428186/, retrieved on December 27, 2016.

2_{http://www.volkskrant.nl/archief/china-beschuldigt-farmaceut-glaxosmithkline-van-omkoping~a3476313/}_{, retrieved on February 7, 2017.}

3_{http://beurs.com/2015/12/19/schokkende-vaststelling-oeso-meer-corruptie-in-geindustrialiseerde-wereld-dan-in-ontwikkelingslanden}_{, retrieved on February 7, 2017.} 4_{https://fd.nl/economie-politiek/1185018/brussel-schiet-tekort-in-aanpak-corruptie}_{, retrieved on February 13, 2017.}

5_{http://www.transparency.org/cpi2015}_{, retrieved on January 2, 2017.}

6_{https://www.dnb.nl/nieuws/dnb-nieuwsbrieven/nieuwsbrief-pensioenen/nieuwsbrief-pensioenen-april-2015/dnb321553.jsp}_{, retrieved on February 8, 2017.} 7_{http://www.volkskrant.nl/buitenland/top-nederlands-oliebedrijf-sbm-aangeklaagd-door-braziliaans-om~a4209869/}_{, retrieved on December 27, 2016.} 8_{http://www.volkskrant.nl/archief/-kpmg-ers-hielpen-bij-corruptie-bouwer-ballast~a3551324/}_{, retrieved on December 28, 2016.}

9_{https://www.nrc.nl/nieuws/2016/09/19/advocaten-drugssmokkelzaak-rechercheurs-moeten-verhoord-worden-a1522213}_{, retrieved on January 2, 2017.} 10_{https://fd.nl/ondernemen/1179443/ns-en-ex-topman-ontkennen-corruptie-bij-limburgse-aanbesteding}_{, retrieved on January 2, 2017.}

(9)

1.1.1 Problem statement

Transparency is an important way to fight against corruption (United Nations Global Compact & Transparency International, 2009). Transparency is defined as a “characteristic of governments, companies, organisations and individuals of being open in the clear disclosure of information, rules, plans, processes and actions” (Transparency International Belgium, 2017:6). Sustainability reports are a way to be transparent on corruption. The World Business Council for Sustainable Development defines sustainability reports as “public reports by companies to provide internal and external stakeholders with a picture of the corporate position and activities on economic, environmental, and social dimensions” (Asif, Searcy, Santos & Kensah, 2013:322-323). During the last 25 years, Sustainability Reporting (SR) has been adopted by many global companies (Kolk, 2004; Lozano & Huisingh, 2011; Asif et al., 2013) and is an interesting subject among scientists and professionals (Hooghiemstra, 2000; Hahn & Kühnen, 2013).

The Dutch government also recognizes the increasing growth of SR. An underlying reason could be that multinational companies in the Netherlands are leaders in the field of SR (KPMG, 2013). Since 2004, The Ministry of Economic Affairs annually determines the degree of transparency of approximately 500 Dutch companies based upon their sustainability report. Therefore, a ‘Transparency Benchmark’ (TB) is used, in which the content and quality of external reporting is investigated within the framework of social aspects of entrepreneurship (Ministerie van Economische Zaken, 2016). The participants of the TB receive points by reporting about predefined topics (e.g. the prevention of conflicts of interest and corruption) and are ranked according to the number of points.

Despite the growing interest of SR, the quantity and quality of transparency need to be better (United Nations Global Compact & Transparency International, 2009; EY, 2016). Despite a relatively large share in global exports, various examples of corruption scandals and being a developed country, the degree of transparency about corruption by Dutch listed as well non-listed companies (state-owned companies and organisations of public interest) is not studied yet. However, there are some reasons why precisely these companies will have to be transparent about corruption (Ministerie van Economische Zaken, 2016). First, there are higher expectations regarding transparency and corporate governance from listed companies. Secondly, the society may expect that state-owned companies are transparent about social aspects of doing business. Finally, organisations of public interest have to publish non-financial information and information about diversity as part of the European Transparency Guideline.

1.1.2 Practical relevance

In recent years, practical studies have shown different results about the transparency on corruption by Dutch listed companies. An investigation of the Dutch Authority for Financial Markets (AFM) has shown that the transparency about policies and risk management regarding corruption by 41 listed companies is insufficient (AFM, 2013). In contrast, results of a study of Transparency International Nederland has shown that 29 Dutch listed companies report relatively well about the measures they take against corruption (Transparency International Nederland, 2016). Does the difference between the results of both studies mean that the transparency about corruption has improved between 2013 and 2016? This study is trying to provide further insights in this difference examining the transparency about corruption in sustainability reports of the years 2013 and 2015. Furthermore, the practical relevance of this study is also that listed as well non-listed companies will be studied, because of the earlier discussed scandals by non-listed companies as state-owned companies and organisations of public interest.

The research topic is also in the interest of the social public12, because the confidence and trust of the social public in business has strongly decreased by global scandals (United Nations Global Compact et al., 2011). Furthermore, companies now operate in a globalized and interconnected world with increasingly complex risks related to integrity and reputation (AFM, 2013). It is primarily the responsibility of companies to ensure that they make themselves not guilty of corruption (NBA, 2016), because it could negatively affect the reputation. Companies also need to pay enough attention to the actions of their employees, associated companies, business partners and agents (United Nations Global Compact et al., 2011), which is also known as chain responsibility. The practical relevance of this study is to provide new insights into the extent of transparency about corruption, which in turn can enhance trust of the social public in companies.

(10)

As will become clear in this section, a number of gaps are identified in current practical literature. This study aims to narrow these gaps to provide more clarity about the degree of transparency on corruption. Furthermore, this study will use an assessment tool which has not been used before in previous studies.

1.1.3 Study purpose

Based on the problem statement and the practical relevance, the purpose of this study is to discover the difference between the current and desired degree of transparency about corruption by three categories of Dutch companies. 1.1.4 Significance

The World Bank Group annually publishes to what extent corruption takes place around the world by investigating the different ways of corruption by 125.000 companies. Based on their most recent study, surveyed companies in the regions of the Middle East and North Africa see corruption as a major problem.13 Furthermore, EY has concluded

that Dutch companies are still too little concerned with fraud prevention and awareness, despite recent national and international fraud and corruption scandals.14 The respondents also indicate that the situation regarding corruption has not improved since 2014 (EY, 2016), despite the increasing number of laws worldwide to fight against corruption (United Nations Global Compact et al., 2011). Therefore, companies need to be more transparent (EY, 2016). So it is relevant to investigate the transparency about corruption now, because it will become clear to what extent Dutch companies report about corruption and which areas require further improvement.

1.1.5 Research question and sub-questions

It is not yet known if the scandals regarding Dutch companies lead to a desired degree of transparency about corruption. Therefore, the research question for this study is as follows: To what extent does the current degree of

transparency by three categories of Dutch companies differ from the desired degree of transparency with regard to corruption? To answer this main research question, the following sub-questions are established:

1) What is the desired degree of transparency with regard to corruption?

2) What is the current degree of transparency by three categories of Dutch companies with regard to corruption? 3) What are the differences between the current and desired degree of transparency with regard to corruption? 4) What could be reasons for the differences between the current and desired degree of transparency by three categories of Dutch companies with regard to corruption?

1.2 Scientific contribution

As became clear in the previous section, corruption is an interesting subject for professionals and society in general. However, it is also a popular subject in scientific studies. First, a general scientific contribution of this study regarding corruption will be explained, after which the scientific contributions for state-owned companies, organisations of public interest and listed companies will be discussed.

General scientific contribution

The underlying reasons of corruption in organisations have already been studied (Ashforth, Gioia, Robinson & Trevino, 2008; Karmann et al., 2016). The difference between the level of corruption among countries has also been studied (Kolstad & Wiig, 2009; Öge, 2016). Furthermore, Gorodnichenko & Peter (2007) have found that corruption not only takes place in the private sector, but also in the public sector. Zhao et al. (2003) have found that a high level of corruption and a low degree of transparency have influenced the level of foreign direct investment. This means that transparency contributes to the degree of investments of foreign investors in a host country. Kolstad & Wiig (2009) have found that transparency by a government needs to be supplemented by other many policies to negatively affect the degree of corruption. However, the transparency of companies will be researched in this study, not how well governments communicate. Indeed, there are many scientific studies about corruption (Zhao et al., 2003), but they did not treat the degree of reporting about it and that is why this study contributes to these papers.

13_{http://www.enterprisesurveys.org/data/exploretopics/corruption}_{, retrieved on February 2, 2017.}

(11)

Scientific contribution by state-owned companies

These days, multiple scientific studies have researched state-owned companies, as in China (Liu & Sun, 2005; Kolk, Hong & Van Dolen, 2010; Huang & Boatang, 2013) and Australia (Adams & McNicholas, 2007). There are also scientific studies which have researched the relation between SR and these organisations in Europe. Greiling & Grüb (2014) have studied the quality and content of sustainability reports of German and Austrian state-owned companies. They also provide a list of studies regarding SR and state-owned companies in other European countries, like the United Kingdom, Italy, Sweden, Spain and Portugal. However, OECD concluded that bribes are mostly given or offered (27%) to employees of state-owned companies (OECD, 2014). Despite the scandals and the increased risk of payments, the transparency about corruption by Dutch state-companies still remains unexposed in scientific research.

Scientific contribution by organisations of public interest

In the TB 2016, the category of organisations of public interest consists mainly of banks and insurers. There have been several studies in which aspects of CSR by banks and insurers have been researched, e.g. the reporting patterns of three Dutch banks (Kolk, 2010), the quality of environmental disclosures of banks in France and America (Crawford & Williams, 2010), the quality of sustainability reports of banks in Bangladesh (Khan, Azizul Islam, Kayeser Fatima & Ahmed, 2011) and the reactions to climate change of insurance companies (Mills, 2009). However, despite the fact that the number of banks and insurers who are publishing sustainability reports has increased (Kolk, 2010), the transparency about corruption by Dutch organisations of public interest has not been examined yet.

Scientific contribution by listed companies

There are several studies about SR by global listed companies (Gray, Kouhy & Lavers, 1995; Idowu & Towler, 2004; Reddy & Gordon, 2010). Studies have paid attention to various levels of disclosure of social and environmental factors, like energy consumption, minority interests, labour circumstances and corporate governance (Guthrie & Abeysekera, 2006), but research into transparency about corruption is scarce. A few studies have concluded that the transparency about corruption is minimal in Australia (Frost, Jones, Loftus & Laan, 2005), Norway (Vormedal & Ruud, 2009), Central-Eastern countries (Steurer & Konrad, 2009) and Greece (Skouloudis & Evangelinos, 2009). Kolk (2004) has paid attention to corruption in her assessment tool to determine whether Dutch companies implement a sustainability report, but the transparency about corruption is not included in her study. Based on scientific research, it is not known yet if Dutch listed companies are transparent about corruption.

As becomes clear in this section, this study contributes to prior scientific research by filling the gap regarding the degree of transparency about corruption by listed and non-listed companies as well as private and public companies. It also contributes to the discussion about transparency on CSR aspects.

1.3 Thesis outline

The remainder of this thesis is structured as follows. First, chapter two will elaborate upon existing theories in order to address the problem statement, followed by the definition of corruption and the general and specific expectation frameworks for the three categories of organisations. Chapter three gives an overview of the selected organisations (study population) and the study method. Next, the results are presented in chapter four. The conclusion, limitations and recommendations for future research will be dealt with in chapter five. This thesis ends with a reference list and the appendices.

(12)

2. THEORETICAL FRAMEWORK

As mentioned above, studies about the degree of transparency on corruption by Dutch companies are scarce. Therefore, several theories which have been used in empirical studies regarding SR will be used. There are different theoretical perspectives to explain the motivation of companies to publish sustainability reports, which also have some similarities (Gray et al., 1995; Hooghiemstra, 2000; Deegan, 2002; Reverte, 2009). The voluntary disclosure theory is the starting point for this research. Although reporting about CSR aspects is not mandatory, there are several reasons why companies still choose to do so. However, one single theory is not enough to explain disclosures because it is a complex subject (Reverte, 2009). The stakeholder theory and the legitimacy theory (social-political theories) are often used in studies about SR (Gray et al., 1995; Cho, Laine, Roberts & Rodrigue, 2015; Comyns, 2016). To answer the research question of this study, these two theories as well as the institutional theory will be explained. Next, the definition of corruption in this study will be outlined. This chapter ends with an expectation framework regarding the transparency about corruption.

2.1 Voluntary Disclosure Theory

The voluntary disclosure theory aims to reducing the information asymmetry between the agent (organisation) and its principals (stakeholders) (Brammer & Pavelin, 2006), which is also known as the agency-relationship (Jensen & Meckling, 1976). Therefore, this theory builds upon the agency theory. “Business organizations are increasingly viewed as being accountable for their social and environmental impacts” (Brammer & Pavelin, 2006:1168). By reporting voluntary disclosures, an organisation can justify what it is doing in the context of their impact on social and environmental factors. Furthermore, companies disclose voluntary information because otherwise the society may think that there is something wrong with the organisation (De Waard, 2011). Therefore, the voluntary disclosure theory has a strong relationship with SR (Brammer & Pavelin, 2006; Clarkson, Yue, Richardson and Vasvari, 2008).

Prior research has shown that not all organisations choose to disclose voluntary information. Patelli & Prencipe (2007) have found a positive relationship between independent directors and voluntary information disclosure by non-financial Italian listed companies. This means that voluntary information disclosure is a possibility to reduce the gap between agents and principals (Patelli & Prencipe, 2007). Furthermore, well performing companies regarding sustainability are more likely to report more concrete and verifiable information because they can report more objective performance indicators, in order to be distinguished from less performing companies (Clarkson et al., 2008). Furthermore, companies increase the extent of their disclosures after a negative incident (Comyns, 2016) and increase the quality when there is initial distress (Holder-Webb & Cohen, 2007). However, there are also circumstances or reasons to disclose less voluntary information. Brammer & Pavelin (2006) have found that companies choose to disclose no voluntary environmental information because of the related costs. On the one hand, companies have financial costs to write sustainability reports because they have to verify, collate and publish information (Brammer & Pavelin, 2006). On the other hand, companies have strategic costs because they have to commit to actions and performance which they publish in their sustainability reports (Brammer & Pavelin, 2006). To conclude, the quality, structure and content of sustainability reports differ substantially within and between sectors given the voluntary nature of SR (Brammer & Pavelin, 2006; Asif et al., 2013).

2.2 Stakeholder Theory

The way companies deal with human rights, bribery issues and other forms of corruption has consequences for stakeholders, the environment and the reputation (AFM, 2013). Deegan (2002) refers to various stakeholders that have different views about how an organisation needs to operate. Examples are shareholders, banks, clients, employees, competitors, the government and the society (Skouloudis & Evangelinos, 2009; Vormedal & Ruud, 2009). The engagement of stakeholders is therefore important to continue as an organisation and to seek approval by different stakeholders (Gray et al., 1995; Adams & McNicholas, 2007; Lozano & Huisingh, 2011). Organisations also consider it is important to communicate with their stakeholders (Kolk, 2004).

(13)

Stakeholders have accepted that sustainability is important when public and private companies make decisions about their policies and strategies (Finkbeiner, Schau, Lehmann & Traverso, 2010). Furthermore, stakeholders have asked companies to be transparent to protect their share(s) in a company (Crawford & Williams, 2010). However, they also have the right to know what organisations are doing regarding CSR aspects (Idowu & Towler, 2004). For that reason SR is an useful way to meet the demands of stakeholders (Kolk, 2010; Hahn & Kühnen, 2013; Comyns, 2016). “Communicating to stakeholders, through sustainability reports, how their requirements are addressed provides legitimation to ensure sustained supply of resources including finances from shareholders and investors; cash flow from customers; license to operate from regulators; and good corporate image from other stakeholders, particularly the community” (Asif et al., 2013:322). This also has strong similarities with the legitimacy theory. However, organisations should identify which stakeholders are relevant to various decisions they will make (Deegan, 2002). Summarizing, the stakeholder theory has a fundamental relationship with SR (De Waard, 2011).

2.3 Legitimacy Theory

The relationship between the organization and its stakeholders is central at the stakeholder theory, while the legitimacy theory deals with the relationship between the organisation and the society (Cho et al., 2015). The legitimacy theory deals with the acceptance of the behaviour and acting of an organisation within the limits and norms of the society (Hooghiemstra, 2000; Comyns, 2016). Therefore, it is also called a social contract between organisations and the society (O’Dwyer, 2002; Chen & Roberts, 2010), in other words a license to operate (Deegan, 2002; De Waard, 2011). Nevertheless, the terms of this social contract are not precisely defined why managers and the society have different perceptions about it (Deegan, 2002). The social bounds and norms will change over time too (Hooghiemstra, 2000). As a consequence of the corruption scandals, the society has become more critical regarding corruption (NBA, 2016). So the society considers that it is important for organisations to identify and support social values, otherwise they will end the contract with the organisation (Idowu & Towler, 2004). For example, this means that clients stop buying products, banks limit funding or the government imposes fines (Deegan, 2002).

Despite the social contract, Ernst & Young (2009) has concluded that 76% of sustainability reports mostly include positive information, rather than a fair and balanced accountability. De Waard (2011) and Chu et al. (2013) have also shown that companies disclose mainly positive information. Furthermore, Clarkson et al. (2008) have concluded that companies report much positive information after a year with unfavourable media attention. So organisations can use sustainability reports to justify their behaviour (Hooghiemstra, 2000; Ieng Chu, Chatterjee & Brown, 2012). This is also confirmed by senior executives who stated that legitimization is the main motive of organisations to publish sustainability reports (O’Dwyer, 2002).

There are four communication strategies that companies can use to increase environmental disclosures to cope with a legitimacy gap, i.e. (1) report actual changes about the current performance to inform the relevant stakeholders of the society after poor performance, (2) change perceptions from the society about the performance, without changing the current performance, (3) distract attention from the society to disclose information about other issues or (4) decrease or change the expectations from the society if they are unrealistic (Clarkson et al., 2008). In that way sustainability reports can act as an emotive symbol to divert the attention of current events (De Waard, 2011).

These strategies are related to impression management, which is defined as “influencing public perception by selectively managing and manipulating information and choosing how it should be presented to the public” (Comyns, 2016:352). It can be a tool to build or maintain the reputation of an organisation (Hooghiemstra, 2000). However, the reputation of an organisation depends not only on the actions of an organisation, but also on the sector in which it operates (Hooghiemstra, 2000).

(14)

2.4 Institutional Theory

The institutional theory has characteristics of the stakeholder theory and of the legitimacy theory (Deegan, 2002; Comyns, 2016), because organisations could use disclosures to react to institutional pressure instead of making the legitimacy gap smaller (Ieng Chu et al., 2012; Comyns, 2016). Examples of institutional pressure are pressures from politics, economics and the society (Glover, Champion, Daniels & Dainty, 2014). Organisations will then change their structure to comply with expectations from institutional stakeholders to justify (Deegan, 2002). This theory can help to explain whether changes in social norms and values, technological developments and rules affect decisions about CSR activities (Glover et al., 2014).

Glover et al. (2014) describe as part of the institutional theory three mechanisms in the environment of an organisation, which influence institutional isomorphism (copycat):

 Coercive isomorphism: this deals with the influences from regulatory bodies as part of the government or

non-governmental organisations (De Waard, 2011). An example is the TB of the Dutch Ministry of Economic Affairs. Coercive isomorphism is crucial in the case of sustainability (Glover et al., 2014).

 Normative isomorphism: this means that groups of professionals share the same view (De Waard, 2011).

Normative pressures also ensure that organisations act in line with CSR aspects (Glover et al., 2014).

 Mimetic isomorphism: this deals with the influence by other organisations in the industry (Glover et al.,

2014). For the design and structure of their sustainability reports, organisations will look specifically into the sustainability reports of others in the industry to find the best practice (Deegan, 2002; De Waard, 2011).

2.5 Definition of corruption

The definition of corruption by Transparency International has already been discussed in chapter 1. This definition is also directly or indirectly used in other studies, like Kolstad & Wiig (2009), Zhao et al. (2003) and Karmann et al. (2016). However, this definition of corruption is relatively concise which makes it difficult to understand its features. For this study, definitions from other studies will also be discussed.

Difference between corruption and fraud

In the context of this study it is relevant to explain the difference between corruption and fraud. Ewelt-Knauer, Knauer & Lachmann (2015:1012) define fraud as “nonviolent acts that are committed for illegal monetary gain while working in a professional organization”. Corruption is the most common way to commit fraud (Bierstaker, 2009). Ewelt-Knauer et al. (2015) distinguish corruption as one of the five types of fraud. This means that fraud can be defined as a broader concept than corruption. However, corruption and fraud do not only cover the behaviour of an individual, but also the collective behaviour of a group or organisation (Ashforth et al., 2008).

Definition of corruption by Dutch authorities

The Dutch Bank has defined the corruption risk as “the risk that financial organisations in the Netherlands are involved in forms of bribery and/or conflicts of interest that undermine the integrity and confidence in financial organisations or financial markets” (De Nederlandsche Bank, 2014:4). This means that organisations inside and outside the Netherlands are part of this definition. Active and passive forms of corruption could also be possible. An active form is a third party paying bribes to employees of a company which supplies products or provides services to another company. The opposite is a passive form, which means that employees directly get bribes from third parties.

The Dutch government defines corruption as a “collective term for bribery, extortion and unauthorized influence” (Ministeries van Buitenlandse Zaken, Veiligheid en Justitie en Economische Zaken et al., 2017:4). That means that bribery is also part of the definition of corruption. This is consistent with the study of Ewelt-Knauer et al. (2015), which concludes that corruption consists of received and paid bribes. The OECD defines foreign bribery as “to offer, promise or give any undue pecuniary or other advantage, whether directly or through intermediaries, to a foreign public official, for that official or for a third party, in order that the official act or refrain from acting in relation to the performance of official duties, in order to obtain or retain business or other improper advantage in the conduct of international business” (OECD, 2014:7). The Ministry of Economic Affairs also uses this definition (Ministerie van Economische Zaken, 2011).

(15)

Definition in this study of corruption

For this study, corruption is defined as “the abuse of a dominant position to gain personal advantage through

receiving or paying bribes, actively or passively, directly or through an intermediary, by Dutch organisations (employees or entire organisations) that affect the integrity of and trust in these organisations”.

2.6 Expectation framework about corruption

The scientific studies and theories that have been discussed will now be used to outline a general and specific pattern of expectations about the transparency on corruption by Dutch organisations. Furthermore, the United Nations 10th Principle is important for this study, because the main subject of this principle is (anti-) corruption.15 This principle is part of ‘The Convention against Corruption’ from the United Nations, which entered into force on December 14, 2005 (Ministerie van Economische Zaken, 2011). The principles of the UN are also important, because they are part of the foreign policy of the Netherlands (Ministerie van Economische Zaken, 2014). Furthermore, United Nations Global Compact & Transparency International (2009) have described three benefits of reporting about corruption, i.e. (1) the internal integrity and transparency will increase, (2) the reputation will improve and (3) the reporting activities of different stakeholders of the company might improve. Despite these benefits and the ‘10th Principle’, this does not mean that all organisations are transparent about corruption. Therefore, a general expectation pattern will be outlined first which applies to all three categories of organisations. Subsequently, a separate expectation framework for each category of organisation will be discussed.

General expectation pattern

The degree of transparency about corruption cannot be expected unambiguously regarding the theories discussed before. One might expect organisations to disclose voluntary information about corruption to decrease the information asymmetry gap with their stakeholders (which is in accordance with the stakeholder theory). Different forms of information might be possible, like procedures, policies and measures regarding its prevention. However, organisations could also choose to disclose less or no information about corruption because of the financial and strategic costs. An example of financial costs would be customers who not buying the products of an organisation, when it operates in a dishonest way. Furthermore, strategic costs are also possible, because organisations can lose strategic discretion when they have committed to actions and performance in the future which they cannot fulfil. However, stakeholders do not need unusable, barred or unreliable information (Crawford & Williams, 2010). It might be expected that organisations will only disclose usable and reliable information to its stakeholders, because they depend on stakeholders to operate. So they want to act in accordance with the norms and values in order to maintain the confidence of stakeholders. However, there is still a chance that an organisation discloses unusable and unreliable information about corruption, because different stakeholders could leave the organisation when it publishes real and reliable information. The institutional theory also contributes to the stakeholder theory, because institutions could require the disclosure of information about corruption and the measures taken to prevent it. An example is the TB, which requires organisations to be transparent about CSR aspects. Organisations also used the criteria of the TB to prepare their sustainability reports (Ministerie van Economische Zaken, 2016). The TB has a compulsive character and strong features of isomorphism, because organisations can copy elements of other reports when they prepare their sustainability report. An underlying reason is that organisations want to receive the first price (The ‘Kristal’) which will be given annually to the organisation with the most points in the TB. There could also be pressure to disclose information about corruption, because competitors also disclose these information. If an organisation chooses to disclose information different from its competitors, customers and suppliers could choose to do business with its competitors, because stakeholders used the results of the TB to analyse companies (B&A B.V., 2013). However, it might also be expected that an organisation discloses no information about corruption, because competitors have not disclosed it either.

(16)

Furthermore, it might be expected that (in accordance with the legitimacy theory) organisations will mainly provide positive information to protect their reputation (United Nations Global Compact et al., 2011; Chu et al., 2013). Examples of positive information in the case of corruption are the commitment of the management and employees to fight corruption or the measures which the organisation has taken to prevent it. It is then possible that negative information in the case of corruption is omitted. Examples of negative information in the case of corruption are bribes which are paid to operate in foreign countries or non-compliance with the policies and procedures by employees. Summarizing, it is not possible to formulate an unambiguous expectation based on the voluntary disclosure theory, stakeholder theory, legitimacy theory and the institutional theory.

Expectation framework of state-owned companies

As mentioned before in section 1.1, the society may expect that state-owned companies are transparent about social aspects of doing business, because the Dutch government has an interest of at least 10% in these companies. However, there are also examples of corruption scandals by Dutch state-owned companies. Unfortunately, the transparency about corruption by these companies still remains unexposed in scientific research which makes it difficult to design a specific expectation framework. However, there are still two reasons why it could be expected that Dutch state-owned companies are transparent about corruption. On the one hand, exemplary behaviour of governments (e.g. state-owned companies) is necessary in the context of CSR aspects (Dumay, Guthrie & Farneti, 2010). If a state-owned company is not transparent about corruption, there is a chance that competitors will neither disclose information about corruption (mimetic isomorphism). On the other hand, the government is one of the sectors where corruption occurs more often than in other sectors (NBA, 2016). So it could be expected that state-owned companies want to legitimize themselves in their sustainability reports (legitimacy theory). Despite the potential exemplary behaviour and a higher risk in this sector, there is still a chance that state-owned companies will not disclose information based on the general expectation pattern. Summarizing, it is not possible to formulate an unambiguous expectation regarding the transparency about corruption of Dutch state-owned companies.

Expectation framework of organisations of public interest

As mentioned before in section 1.1, organisations of public interest have to publish non-financial information and information about diversity as part of the European Transparency Guideline. So this guideline also creates pressure to report about corruption, which is in accordance with the institutional theory. However, it is also possible that these organisations do not disclose information about corruption because it negatively affects the confidence of stakeholders. Nevertheless, the transparency about corruption by these companies in the Netherlands still remains unexposed in scientific studies despite the corruption scandals. This makes it difficult to design a specific expectation framework. The transparency about corruption of these organisations will therefore be mainly based on the general expectation pattern. This also means that it is not possible to formulate an unambiguous expectation regarding the transparency about corruption of Dutch organisations of public interest.

Expectation framework of listed companies

This group consists of 73 companies that are stock-listed at NYSE Euronext. As mentioned before in section 1.1, there are higher expectations of these companies regarding transparency and corporate governance. However, it might be expected that listed companies do not disclose information about corruption, because this can result in a lower share price. This has negative consequences for investors of the organisation. Based on scientific studies in other countries, it could be expected that transparency about corruption by listed companies in their sustainability reports is still moderate, as in Australia (Frost et al., 2005), Norway (Vormedal & Ruud, 2009), Central- and Eastern European countries (Steurer & Konrad, 2009) and Greece (Skouloudis & Evangelinos, 2009). This is consistent with the study of the AFM, which has shown that transparency about corruption by 41 listed companies is insufficient (AFM, 2013). However, Transparency International Nederland (2016) has concluded that on average twenty large listed Dutch companies report better about corruption than nine small listed Dutch companies. This is also the case with Belgian companies (Transparency International Belgium, 2017). Summarizing, it is not possible to formulate an unambiguous expectation regarding the transparency about corruption of Dutch listed companies.

(17)

2.7 Concluding paragraph

This chapter has explained four theories that are important for this study. Furthermore, it defined corruption and outlined various expectation frameworks. Before it can be examined whether the expectations meet the current transparency, the research design of this study will be explained in the next chapter.

(18)

3. RESEARCH DESIGN

This chapter starts with the selection of organisations, in other words the study population. Thereafter, the study method will be discussed, which consists of the explanation of a content analysis and the assessment tool. This tool is made to examine the current degree of transparency about corruption by three categories of Dutch organisations.

3.1 Study population

The TB 2016 is used to select organisations for the collection of data, as it provides insight about the transparency regarding the reporting year 2015 by 512 Dutch organisations across six categories. Only 140 of these companies across three categories will be selected for this study. This also means that the other 372 companies across three categories will not be investigated, because there is no direct reason (among others a specific guideline or market pressure) why these companies will be transparent about corruption. Next, a targeted selection has been made to achieve a balanced distribution of the companies among the three categories, which makes it also possible to compare the results. Therefore, the final sample of each category consists of the best five, middle five16 and worst five companies regarding their score in the TB 2016. These companies are chosen to get a good picture of the entire category, which means that not only the outliners will be studied. Below, the creation of the sample for the three categories of organisations will be discussed.

State-owned companies

The Netherlands has 29 state-owned companies and six financial institutions which are temporarily owned by the government because of the financial crisis (Ministerie van Financiën, 2016). Nevertheless, 27 of these companies are included in the TB 2016, because only companies with a public interest of minimal 10% are added to this category (Ministerie van Economische Zaken, 2016). However, a number of adjustments have been made in order to arrive at the final sample. First, two companies with a zero score have been removed. Secondly, one company has been removed, because it has not received a score on the criteria 2C. As part of this criteria, companies can disclose information about the prevention of conflict of interest, bribery and corruption (see Appendix 1). Finally, nine companies have been removed, because they were not part of the best five, middle five or worst five state-owned companies regarding their score in the TB 2016.

Organisations of public interest

Some organisations of public interest are also listed companies, but they have been added to the category of listed companies in the TB 2016 (Ministerie van Economische Zaken, 2016). 40 companies have been added to this category. However, a number of adjustments have been made in order to arrive at the final sample. First, three organisations have been removed, because these companies have chosen to use a special rule for organisations with an international group report. These organisations are placed on a separate list without a mutual score. Secondly, three organisations have been removed, because they only operate abroad. They do have a seat in the Netherlands, but the shares are not traded on the Dutch stock exchange. Thirdly, three organisations with a zero score have been removed. Fourthly, three companies have been removed, because they have not received a score on the criteria 2C. Finally, twelve companies are removed, because they are not part of the best five, middle five or worst five organisations of public interest regarding their score in the TB 2016.

Listed companies

All listed companies (73) on NYSE Euronext have been included in this category. However, a number of adjustments have been made in order to arrive at the final sample. First, three companies with a zero score have been removed. Secondly, six companies have been removed, because they have not received a score on the criteria 2C. Finally, 49 companies have been removed, because they are not part of the best five, middle five or worst five listed companies regarding the score in the TB 2016.

(19)

Based on the above selection it can be concluded that nine companies have received a zero-score, which means that they have not made their reports available free of charge or were late publishing about corporate social responsibility (Ministerie van Economische Zaken, 2016). Next, ten companies have not been transparent about economic aspects of entrepreneurship (criteria 2C), so neither about corruption. The 45 organisations in the final sample have received points regarding this criteria. However, it is still possible that these organisations have not published information about corruption, because they can receive the maximum points of this criteria when they publish a quantitative explanation about minimal four of ten categories. This is also the first limitation of this study, because a score on this criteria does not mean that a company has been transparent about corruption. The organisations in the final sample are included in Appendix 2, in table 3 (state-owned companies), table 4 (organisations of public interest) and table 5 (listed companies). Each table provides an overview of the best five, middle five and worst five scoring companies and shows which companies have been removed from the sample due to the reasons specified above.

3.2 Study method

This study will use a qualitative research method to examine the current degree of the transparency about corruption by three categories of Dutch organisations. This method focuses on particular events in specific contexts (Smith, 2015). The motivation why a qualitative research method is chosen is the following. First, there is an open research question (Baarda, 2014). Secondly, the research question of the study is relatively broad (Baarda, 2014). Thirdly, this method will be often used in the case of an explorative research (Baarda, 2014). This study is explorative, because only a few practical studies have researched the transparency about corruption by Dutch companies. Fourthly, the quality of the transparency is just as important as the quantity of the information (Baarda, 2014), because an excessive quantity of information can sometimes undermine transparency (Hagelin, Bromley, Hart, Kile, Lachowski, Omitoogun, Perdomo, Surry & Wezeman, 2006). However, by using this method, the results are not generally applicable but they contribute mainly to the discussion about the way in which Dutch companies are transparent about corruption. Furthermore, the verifiability is a difficult aspect regarding a qualitative research method (Baarda, 2014). Therefore, the assessment tool is added in Appendix 3 and examples of the assessment of three companies (one of each category) are added in Appendix 8, allowing to check the results of this study.

3.2.1 Content analysis

A type of a qualitative research method is a combination of a descriptive content analysis and interpretative analysis (Wester, 2006), which will be applied in this study. On the one hand, a descriptive content analysis focuses on the description of patterns in documents (Wester, 2006). An example is whether or not a company has a policy regarding to corruption. On the other hand, an interpretative analysis should reconstruct complex features of documents (Wester, 2006). An example is whether or not employees are involved in decision making regarding the policies and activities to prevent corruption. This is not the first time that a combination of both analyses (hereafter content analysis) will be used. A content analysis is used in studies with various subjects (Smith, 2015), among others studies regarding SR (Guthrie & Abeysekera, 2006; Asif et al., 2013). A content analysis can be defined as an analysis that “involves codifying qualitative and quantitative information into pre-defined categories in order to derive patterns in the presentation and reporting of information” (Guthrie & Abeysekera, 2006:129). Previous studies have also used a content analysis to evaluate disclosures in reports of organisations (Guthrie & Abeysekera, 2006).

However, there are some essential requirements regarding an effective content analysis, such as a clear definition of the different categories of classification, a systematic allocation of items to the different categories and a special attention regarding the reliability and validity (Guthrie & Abeysekera, 2006). The monitoring instrument of this study contributes to these requirements, which is also required regarding a content analysis (Wester, 2006). This instrument will be discussed in the next section. Furthermore, the assessment of the reports is only performed by the researcher, which means that no outsiders have been involved in the research. Furthermore, the first fifteen organisations which are examined are reassessed at the end, which also contributes to the reliability of this study.17

(20)

Based on the above characteristics, the content analysis will be mainly qualitative in nature, because of the qualitative information in sustainability reports. By using a qualitative content analysis, the theoretical perspectives play an important role (Wester, 2006). Therefore, the theories discussed in chapter two are placed in an interpretative framework, which is included in table 6 in Appendix 4. In this way, it is clear how the theoretical perspectives are included at the data collection. Furthermore, another feature of this analysis is that at the beginning of the data collection not all necessary insights were present and added to the monitoring instrument (Wester, 2006). This was also the case in this study. The adjustments in the monitoring instrument after the data collection of the first fifteen reports regarding the reporting year 2013 will be discussed at the end of section 3.2.2. Other features of a content analysis are a relatively small sample size and an intensive data collection (Smith, 2015).

When carrying out a content analysis, existing material in the form of sustainability reports or integrated annual reports18 will be used. Advantages of the use of existing material are that it takes less time and is more valid than interviews or observations (Baarda, 2014). However, it is possible to study different aspects of existing material: words, sentences or various parts of a page (Ieng Chu et al., 2012). In this study, a search for certain words and various parts of a page will be used, which means that the content analysis will consist of two parts. First, 90 reports (45 of 2013 and 45 of 2015) will be studied to search for the keywords: corruption, bribery and bribes.19 Thereafter, the second analysis consists of examining the reports of 2013 and 2015 which include information about corruption using the assessment tool. So the sample of the second analysis is dependable on the results of the first analysis.

3.2.2 Assessment tool

In order to examine the current degree of transparency about corruption by the selected 45 organisations, an assessment tool is developed to perform the content analysis. This also means that the assessment tool can be defined as the monitoring instrument of this study, as it indicates which information about corruption can be minimally expected. The more points are scored according to the assessment tool, the better the quality of accountability about corruption. As mentioned before in chapter two, the ‘10th Principle’ of the United Nations is the starting point in discussing the transparency about corruption. Therefore, a further explanation of this principle will be discussed first. The similarities of this principle with the OECD guidelines and the Global Reporting Initiative (GRI) guidelines will also be discussed below. Furthermore, the assessment tool is substantiated by scientific theories. An interpretative framework of the discussed scientific theories is included in Appendix 4. Finally, the points of the assessment tool are based on the criteria according to the TB 2016. This means that companies receive more points if they disclose specific information and fewer points if they disclose general information only.

10th Principle of the United Nations

The UN Principles are an integral part of the foreign policy in the Netherlands (Ministerie van Economische Zaken, 2014). They are also part of the foreign policy to fight against corruption in other global countries (United Nations Global Compact et al., 2011) and could hence be defined as an international and universal standard. Therefore, the ‘10th Principle’ of the United Nations also corresponds to the desired degree of transparency about corruption. This answers the first sub-question of this study too. The United Nations have also developed a framework for preparing companies to implement the goals of the ‘10th Principle’ (United Nations Global Compact et al., 2011). This framework will assist organisations to design policies to deal with and eliminate corruption (United Nations Global Compact et al., 2011).

18_{An integrated annual report is a report which include financial and sustainable information about the company.}

19_{Also the Dutch names of these keywords are important, because the selected organisations could have published a Dutch or English sustainability report. In the case}

(21)

The assessment tool of this study consists of three categories as part of the reporting guidance of the United Nations, which has been developed to report comprehensively and effectively about the ‘10th Principle’ (United Nations Global Compact & Transparency International, 2009). This reporting guidance is also used in many best practices in the fight against corruption (United Nations Global Compact et al., 2011). “Only by fully implementing solid

institutional policies, reporting on their implementation and engaging in collective action can companies be sufficiently assured that the tinge of corruption will not apply to them” (United Nations Global Compact et al., 2011:4). Table 1 provides an overview of the distribution among the three categories regarding the seven Basic Reporting Elements and fifteen Desired Reporting Elements, which is also visible in the assessment tool (see Appendix 3). The Basic Reporting Elements corresponds to general information about corruption, while the Desired Reporting Elements corresponds to specific information about corruption.

Table 1 – Distribution of 22 Reporting Elements (United Nations Global Compact & Transparency International, 2009)

Basic Reporting Elements Desired Reporting Elements

Commitment & Policy B1 – B2 D1 – D5

Implementation B3 – B6 D6 – D11

Monitoring B7 D12 – D15

Similarities with OECD guidelines and GRI guidelines

The OECD guidelines for multinational organisations are used by 44% of the 512 companies that participated in the TB 2016 (Ministerie van Economische Zaken, 2016). The 7th OECD guideline is about fighting against corruption, which is also the only mandatory OECD guideline.20 Therefore, it might be expected that companies using the OECD guidelines are transparent about corruption. The OECD guidelines also form the basis for the Dutch international CSR policy (Ministerie van Economische Zaken, 2016), but they are not reporting standards. However, they have strong similarities with the UN Guiding Principles (Tweede Kamer der Staten-Generaal, 2013). Therefore, the OECD guidelines are indirectly visible in the assessment tool of this study.

The GRI guidelines give a comprehensive overview of different subjects which an organisation can use to report about sustainability (Lozano & Huisingh, 2011; Asif et al., 2013; Global Reporting Initiative, 2013). The GRI guidelines are mainly used, when organisations prepare a sustainability report (AFM, 2013; KPMG, 2013). Dutch companies are no exception, because 49% of the 512 companies which participated in the TB 2016 have used the GRI guidelines (Ministerie van Economische Zaken, 2016). Companies can use the GRI-guidelines to be transparent about corruption as part of the Desired Reporting Elements of the ‘10th Principle’ of the United Nations, because it has strong similarities with the principles of the United Nations (United Nations Global Compact et al., 2011; Global Reporting Initiative, 2013). This is also visible in the assessment tool (see Appendix 3).

Adjustments after the first data collection

A number of adjustments have been included in the assessment tool after the data collection of the first fifteen reports regarding the reporting year 2013. First, the two Basic Reporting Elements of ‘Commitment & Policy’, B1 & B2, have been separated, because of the big difference between the application of general laws and regulations (for example they only endorse the OECD guidelines or the UK Bribery Act) and specific laws and regulations (United Nations Global Compact). Second, four GRI-guidelines under ‘B3’ (communication about and training on anti-corruption commitment) have been moved within the same reporting element. Two GRI-guidelines have been added to the general information and the other two GRI-guidelines to information about human resources procedures.

3.3 Concluding paragraph

This chapter has discussed the selection of organisations which will be studied and the study method. As part of the discussion of the study method, the assessment tool also answers the first sub-question, because it corresponds to the desired degree of transparency about corruption. Now, it is possible to discuss the results in the next chapter.

Transparency about corruption: too good to be true?

A study about the level of transparency on corruption by three

categories of Dutch companies by the use of a content analysis

Transparency about corruption:

too good to be true?

Student:

Bryan Doorten

S3025802

Supervisor:

Prof. dr. D.A. de Waard RA MA

Co-assessor:

Prof. dr. I.J.J. Burgers

Groningen, June 12, 2017

Transparency about corruption:

too good to be true?

A study about the level of transparency on corruption by three categories of Dutch

companies by the use of a content analysis

Master Thesis Accountancy & Controlling – Track Accountancy

Faculty for Economics and Business

University Groningen

ABSTRACT

FOREWORD

TABLE OF CONTENTS

-LIST OF ABBREVIATIONS

LIST OF TABLES

LIST OF CHARTS

1.

INTRODUCTION

1.1

Focus of this study

1.2

Scientific contribution

1.3

Thesis outline

2.

THEORETICAL FRAMEWORK

2.1

Voluntary Disclosure Theory

2.2

Stakeholder Theory

2.3

Legitimacy Theory

2.4

Institutional Theory

2.5

Definition of corruption

2.6

Expectation framework about corruption

2.7

Concluding paragraph

3.

RESEARCH DESIGN

3.1

Study population

3.2

Study method

3.2.1 Content analysis

3.2.2 Assessment tool

3.3

Concluding paragraph