News on corruption in the Wall Street Journal and the Corruption Perception Index (CPI).

Based on cross-time-section series data collected from Wall Street Journal (WSJ), this article suggests that the Corruption Perceptions Index (CPI) for 60 countries/regions published by Transparency International is highly correlated with WSJ news about "corruption", especially for eight strong countries. Compared to a slight converging trend of CPI standard deviation, the CPI score presents no significant response to time. Our partial multiple correlation model suggests that WSJ news may be a good indicator of corruption levels in a country, although not as a potential cause influencing CPI.

Introduction

Corruption is an important issue in business, economic, and social science research. Due to differences in research focus and perspective, previous literature has provided varying definitions for corruption. Some studies examine the corrupt behavior of politicians (LaPalombara, 1995; Oldenbury, 1987), while others describe corruption between private parties, such as in Commercial bribery (Coase, 1979). Shleifer and Vislmy define corruption as "the use of governmental power to create rents via entry controls, regulatory cartel enforcement, or raising rivals' costs" (Shleifer & Vishny, 1993: 599). In Macrae's definition, corruption is "the arrangement that involves an exchange between two parties which (1) has an influence on the allocation of resources either immediately or in the future; and (2) involves the use or abuse of public or collective responsibility for private ends" (Macrae, 1982: 678).

Since Transparency International (TI) began to publish its annual report of Corruption Perceptions Index (CPI) in 1995, this index has become a leading indicator of corruption in social science research, and has been widely used for measuring the level of corruption across countries. The definition given by TI focuses on the public sector, and is defined as "the misuse of public power for private benefit such as bribing of public officials, kickbacks on public procurement, or embezzlement of public funds" (Transparency International, 2003). The CPI score reflects the impressions and perceptions of corruption in dozens of countries based on surveys of business people, academics, risk analysts, and the general public, and ranges from "0 = highly corrupt" to "10 = highly clean". As we are interested in the explanation and justification of perceived levels of corruption, TI's definition will be used for the current study.