Reach | Research at Newcastle University Business School
Corporate corruption Corporate corruption is rarely out of the headlines, but is it the hubris of CEOs or a flawed financial system which is to blame? r Claudia Gabbioneta D Senior Lecturer in Accounting and Finance
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cclaimed research by Dr Claudia Gabbioneta Newcastle University Business School’s Senior Lecturer in Accounting and Finance – has provided academic analysis of institutional environments which are simply not up to the job of preventing corporate wrong doing. A cosy financial system where professional service firms fail to rigorously check each other’s figures and overestimate liquidity, has allowed some unscrupulous firms to trade fraudulently or encouraged companies to do so, Claudia’s research argues. The chastening stories of US energy giant Enron and Italian multinational dairy firm Parmalat – both now synonymous with financial mismanagement – rocked the markets and shook public faith in how big business operates. Claudia was part of a team of academics from universities in Italy and Canada whose studies of the fall of these corporate giants into
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bankruptcy shone a light on the failure of regulators and markets to stop financial corruption. Claudia’s work and conclusions have featured prominently in professional journals. She is helping to create a better understanding of why such crises arise and what needs to be done to stop them happening again in the future. Her research features in her lectures to Business School students. “There is something fundamentally wrong in the way that financial markets work,” said Claudia. “We are not saying in any way that the CEOs or management of corrupted companies should not be held responsible for what they did. “Our point is that it is more the system than a single person to blame. The system does not work, it is broken and it is not effective in preventing corporate corruption in the future.
“The idea is to raise awareness and possibly to influence regulators in order to improve the way financial markets function.” Claudia maintains that unless professional services work more closely together, thoroughly checking each other’s financial figures, then more corporate scandals are inevitable. “It is a mutual reliance on work done by others which enables the system to hide or even push companies into corporate corruption. “I think that a serious reconsideration of the boundaries between professional services firms working in the financial market may actually help solve the problem, to guarantee some sort of effective functioning of the market. “We should reconsider the system as a whole. We should seriously question the way it functions.”
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