Corruption Perception and Firm Performance: Evidence from High-Polluting Listed Companies in South Africa

The corruption remains a persistent challenge that distort firm financial performance by increasing operational costs, distorting resource allocation and weakening investor confidence. However, limited studies have been conducted to examine the impact of corruption on financial performance of companies listed in Johannesburg Stock Exchange in South Africa. Limited empirical evidence on the impact of corruption on financial performance in firms listed on the Johannesburg Stock Exchange many result in policy and governance frameworks that are not evidence-based, limiting the interventions aimed at improving curbing corruption and improving financial performance with JSE-listed companies. This study explores how corruption perception impacts the financial performance of high-polluting companies listed on the Johannesburg Stock Exchange (JSE) for the period 2015 to 2025. The corruption perception index was obtained from the transparency international corruption perception. The financial data and corporate governance data were companies’ annual financial reports/integrated reports. Corruption perception is measured using the Corruption Perception Index (CPI), while firm performance is proxied by return on assets (ROA) and Tobin’s Q. Board independence and board gender diversity are included as governance control variables. The study then utilises the System Generalised Method of Moments (GMM) for establishing the correlation between corruption perception and financial performance. Study’s findings reports that corruption is negatively related to financial performance. The results reveal stronger positive correlation between corporate and firm performance. The findings reveal that corporate governance could enhance firm financial performance while corruption perception impairs firm performance. The present study suggests that high polluting-companies listed on the Johannesburg Stock Exchange need more robust corporate governance mechanisms to curb corruption practices and to improve firm performance.