Strength of auditing and reporting standards, corruption and money laundering: a cross-country investigation
ISSN: 0268-6902
Article publication date: 5 October 2020
Issue publication date: 15 December 2020
Abstract
Purpose
This paper aims to investigate the relationship between the strength of auditing and reporting standards (SARS) and money laundering, and test whether the SARS moderates the association between corruption and money laundering.
Design/methodology/approach
The sample consists of 348 country-year observations over the period 2015–2017. Data on money laundering are collected from Basel Anti-Money Laundering Reports for 2015–2017, while data on SARS and corruption are collected from the Global Competiveness Reports for the same years.
Findings
The findings of this study suggest that the SARS is negatively associated with money laundering, while corruption has an insignificant effect on the same variable. The effect of corruption on money laundering becomes positive and significant after removing the SARS. This result implies that the SARS and corruption represent two concurrent forces influencing money laundering phenomenon with a prevailing negative effect for the SARS. When testing for the moderating effect of SARS on the positive association between corruption and money laundering, findings show that the positive association remains stable under low SARS environments, while it is mitigated under high SARS. This moderating effect is further confirmed when using an interaction variable between the SARS dummy variable and corruption as this interaction variable has a negative effect on money laundering.
Originality/value
The findings emphasize the role played by the SARS in reducing money laundering and mitigating the positive association between corruption and money laundering. These results may have policy implications for governments aiming to combat this phenomenon.
Keywords
Acknowledgements
We would like to address our gratitude for both reviewers, the associate editor and the editor for their helpful comments to improve the content of the paper. The author acknowledges the Deanship of Scientific Research at King Faisal University for the financial support under Nasher track.
Citation
Amara, I., Khlif, H. and El Ammari, A. (2020), "Strength of auditing and reporting standards, corruption and money laundering: a cross-country investigation", Managerial Auditing Journal, Vol. 35 No. 9, pp. 1243-1259. https://doi.org/10.1108/MAJ-10-2018-2026
Publisher
:Emerald Publishing Limited
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