Corporate Disclosure in Relation to Combating Corporate Bribery: A Case Study of Two Chinese Telecommunications Companies

This paper investigates the association between global community\nconcerns about bribery activities and anti-bribery disclosure practices\nby two Chinese telecommunication companies operating internationally,\nnamely China Mobile and ZTE. Based on content analysis of annual reports\nand global news media articles over a period of 16 years from 1995-2010,\nthe findings suggest that the changes in the level of disclosures by the\ntwo major Chinese telecommunications companies were closely associated\nwith the level of international concerns over bribery practices within\nthe Chinese telecommunications industry. This finding indicates that the\ncompanies adopt anti-bribery disclosure practices in order to minimise\nthe gap of trust (social capital) between companies themselves and\nglobal stakeholders. In this paper we argue that, for domestic companies\nin China, culturally constructed social capital, such as guanxi, creates\na level of trust between managers and their stakeholders, which obviates\nthe need for managers to disclose anti-bribery performance information.\nHowever, for companies operating internationally, as social capital is\ninadequate to bridge the gap of trust between managers and global\nstakeholders, managers use disclosures of anti-bribery performance\ninformation as a way to minimise such a gap.