IDEAS home Printed from https://ideas.repec.org/p/idb/brikps/9678.html
   My bibliography  Save this paper

Blue-Collar Crime and Finance

Author

Listed:
  • Bernales, Alejandro
  • Beuermann, Diether
  • Cumming, Douglas
  • Olid, Christian

Abstract

Relatively little is known about the effects of blue-collar crime (theft, robbery, vandalism or arson) on financial decisions. Previous literature has focused its attention either on 'regional' crime rates or the 'perception' of crime as business obstacles. Instead, we examine financing terms of 'individual' firms that 'effectively' experimented blue-collar crime events. We show that blue-collar crime worsens the access and conditions to external financing, which is unexpected since firms do not have to reveal to lenders that they suffered such crime incidents. We also find evidence that firm-information leakages may explain the negative effects of blue-collar crime on financing terms.

Suggested Citation

  • Bernales, Alejandro & Beuermann, Diether & Cumming, Douglas & Olid, Christian, 2022. "Blue-Collar Crime and Finance," IDB Publications (Working Papers) 9678, Inter-American Development Bank.
    • Handle: RePEc:idb:brikps:9678
    DOI: http://dx.doi.org/10.18235/0001745
    as

    Download full text from publisher

    File URL: https://publications.iadb.org/publications/english/document/Blue-Collar_Crime_and_Finance_en_en.pdf
    Download Restriction: no
    File URL: https://libkey.io/http://dx.doi.org/10.18235/0001745?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Edward L. Glaeser & Bruce Sacerdote & José A. Scheinkman, 1996. "Crime and Social Interactions," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 111(2), pages 507-548.
    2. Yaldız Hanedar, Elmas & Broccardo, Eleonora & Bazzana, Flavio, 2014. "Collateral requirements of SMEs: The evidence from less-developed countries," Journal of Banking & Finance, Elsevier, vol. 38(C), pages 106-121.
    3. Dirk Jenter & Katharina Lewellen, 2015. "CEO Preferences and Acquisitions," Journal of Finance, American Finance Association, vol. 70(6), pages 2813-2852, December.
    4. James J. Heckman, 1976. "The Common Structure of Statistical Models of Truncation, Sample Selection and Limited Dependent Variables and a Simple Estimator for Such Models," NBER Chapters, in: Annals of Economic and Social Measurement, Volume 5, number 4, pages 475-492, National Bureau of Economic Research, Inc.
    5. Antonio Falato & Dan Li & Todd Milbourn, 2015. "Which Skills Matter in the Market for CEOs? Evidence from Pay for CEO Credentials," Management Science, INFORMS, vol. 61(12), pages 2845-2869, December.
    6. Rony Pshisva & Gustavo A. Suárez F., 2006. "Captive Markets: the Impact of Kidnappings on Corporate Investment in Colombia," Coyuntura Económica, Fedesarrollo, June.
    7. Andy Cosh & Douglas Cumming & Alan Hughes, 2009. "Outside Enterpreneurial Capital," Economic Journal, Royal Economic Society, vol. 119(540), pages 1494-1533, October.
    8. Bruno Cassiman & Reinhilde Veugelers, 2002. "R&D Cooperation and Spillovers: Some Empirical Evidence from Belgium," American Economic Review, American Economic Association, vol. 92(4), pages 1169-1184, September.
    9. Rony Pshisva & Gustavo A. Suarez, 2006. "'Captive markets': the impact of kidnappings on corporate investment in Colombia," Finance and Economics Discussion Series 2006-18, Board of Governors of the Federal Reserve System (U.S.).
    10. Emilia Bonaccorsi di Patti, 2009. "Weak institutions and credit availability: the impact of crime on bank loans," Questioni di Economia e Finanza (Occasional Papers) 52, Bank of Italy, Economic Research and International Relations Area.
    11. Cumming, Douglas & Peter Groh, Alexander & Johan, Sofia, 2018. "Same rules, different enforcement: Market abuse in Europe," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 54(C), pages 130-151.
    12. Raghuram G. Rajan & Luigi Zingales, 2001. "The Firm as a Dedicated Hierarchy: A Theory of the Origins and Growth of Firms," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 116(3), pages 805-851.
    13. Ashton, John & Burnett, Tim & Diaz-Rainey, Ivan & Ormosi, Peter, 2021. "Known unknowns: How much financial misconduct is detected and deterred?," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 74(C).
    14. Lang, William W. & Nakamura, Leonard I., 1990. "The dynamics of credit markets in a model with learning," Journal of Monetary Economics, Elsevier, vol. 26(2), pages 305-318, October.
    15. Demski, Joel S, et al, 1999. "Practices for Managing Information Flows within Organizations," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 15(1), pages 107-131, April.
    16. Meghana Ayyagari & Asli Demirgüç-Kunt & Vojislav Maksimovic, 2008. "How Important Are Financing Constraints? The Role of Finance in the Business Environment," The World Bank Economic Review, World Bank, vol. 22(3), pages 483-516, November.
    17. Yuval Deutsch & Thomas W. Ross, 2003. "You are Known by the Directors You Keep: Reputable Directors as a Signaling Mechanism for Young Firms," Management Science, INFORMS, vol. 49(8), pages 1003-1017, August.
    18. Karpoff, Jonathan M., 2021. "The future of financial fraud," Journal of Corporate Finance, Elsevier, vol. 66(C).
    19. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 31(3), pages 129-137.
    20. Shen, Zhe & Sowahfio Sowah, Joseph & Li, Shan, 2022. "Societal trust and corporate risk-taking: International evidence," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 76(C).
    21. Karpoff, Jonathan M & Lott, John R, Jr, 1993. "The Reputational Penalty Firms Bear from Committing Criminal Fraud," Journal of Law and Economics, University of Chicago Press, vol. 36(2), pages 757-802, October.
    22. Bryan A. Stuart & Evan J. Taylor, 2021. "The Effect of Social Connectedness on Crime: Evidence from the Great Migration," The Review of Economics and Statistics, MIT Press, vol. 103(1), pages 18-33, March.
    23. Buss, Philipp & Peukert, Christian, 2015. "R&D outsourcing and intellectual property infringement," Research Policy, Elsevier, vol. 44(4), pages 977-989.
    24. Tosun, Onur Kemal, 2021. "Cyber-attacks and stock market activity," International Review of Financial Analysis, Elsevier, vol. 76(C).
    25. Amit Ghosh & Salvador Contreras, 2022. "Local Banking Market Frictions and Youth Crime: Evidence from Bank Failures," Journal of Financial Services Research, Springer;Western Finance Association, vol. 61(1), pages 43-75, February.
    26. Kamiya, Shinichi & Kang, Jun-Koo & Kim, Jungmin & Milidonis, Andreas & Stulz, René M., 2021. "Risk management, firm reputation, and the impact of successful cyberattacks on target firms," Journal of Financial Economics, Elsevier, vol. 139(3), pages 719-749.
    27. Milidonis, Andreas & Stathopoulos, Konstantinos, 2014. "Managerial Incentives, Risk Aversion, and Debt," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 49(2), pages 453-481, April.
    28. K. J. Arrow, 1971. "The Economic Implications of Learning by Doing," Palgrave Macmillan Books, in: F. H. Hahn (ed.), Readings in the Theory of Growth, chapter 11, pages 131-149, Palgrave Macmillan.
    29. Steve Gibbons, 2004. "The Costs of Urban Property Crime," Economic Journal, Royal Economic Society, vol. 114(499), pages 441-463, November.
    30. Gaviria, Alejandro, 2002. "Assessing the effects of corruption and crime on firm performance: evidence from Latin America," Emerging Markets Review, Elsevier, vol. 3(3), pages 245-268, September.
    31. Daniele, Vittorio & Marani, Ugo, 2011. "Organized crime, the quality of local institutions and FDI in Italy: A panel data analysis," European Journal of Political Economy, Elsevier, vol. 27(1), pages 132-142, March.
    32. Lu, Jing & Wang, Jun, 2021. "Corporate governance, law, culture, environmental performance and CSR disclosure: A global perspective," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 70(C).
    33. Elizabeth Asiedu & James Freeman, 2009. "The Effect of Corruption on Investment Growth: Evidence from Firms in Latin America, Sub‐Saharan Africa, and Transition Countries," Review of Development Economics, Wiley Blackwell, vol. 13(2), pages 200-214, May.
    34. Mariagiovanna Baccara, 2007. "Outsourcing, information leakage, and consulting firms," RAND Journal of Economics, RAND Corporation, vol. 38(1), pages 269-289, March.
    35. Yaxuan Qi & Lukas Roth & John K Wald, 2011. "How legal environments affect the use of bond covenants," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 42(2), pages 235-262, February.
    36. Ann Dryden Witte, 1980. "Estimating the Economic Model of Crime With Individual Data," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 94(1), pages 57-84.
    37. J·n Z·bojnÌk, 2002. "A Theory of Trade Secrets in Firms," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 43(3), pages 831-855, August.
    38. Hermalin, Benjamin E & Weisbach, Michael S, 1998. "Endogenously Chosen Boards of Directors and Their Monitoring of the CEO," American Economic Review, American Economic Association, vol. 88(1), pages 96-118, March.
    39. Fernandes, Ana M., 2008. "Firm Productivity in Bangladesh Manufacturing Industries," World Development, Elsevier, vol. 36(10), pages 1725-1744, October.
    40. Wang, Heng Emily & Wang, Qin Emma & Wu, Wentao, 2022. "Short selling surrounding data breach announcements," Finance Research Letters, Elsevier, vol. 47(PB).
    41. Mariagiovanna Baccara & Heski Bar-Isaac, 2008. "How to Organize Crime -super-1," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 75(4), pages 1039-1067.
    42. Mariagiovanna Baccara & Ronny Razin, 2007. "Bargaining Over New Ideas: The Distribution of Rents and the Stability of Innovative Firms," Journal of the European Economic Association, MIT Press, vol. 5(6), pages 1095-1129, December.
    43. Steven D. Levitt, 2017. "The Economics of Crime," Journal of Political Economy, University of Chicago Press, vol. 125(6), pages 1920-1925.
    44. Jiang, Fuxiu & Cai, Xinni & Nofsinger, John R. & Zheng, Xiaojia, 2020. "Can reputation concern restrain bad news hoarding in family firms?," Journal of Banking & Finance, Elsevier, vol. 114(C).
    45. Yaxuan Qi & Lukas Roth & John Wald, 2017. "Creditor protection laws, debt financing, and corporate investment over the business cycle," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 48(4), pages 477-497, May.
    46. Matthew Rabin & Joel L. Schrag, 1999. "First Impressions Matter: A Model of Confirmatory Bias," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 114(1), pages 37-82.
    47. Thaler, Richard, 1978. "A note on the value of crime control: Evidence from the property market," Journal of Urban Economics, Elsevier, vol. 5(1), pages 137-145, January.
    48. Armitage, Seth & Hou, Wenxuan & Liu, Xianda & Wang, Cong, 2021. "Law, Endowment and Inequality in Access to Finance," Finance Research Letters, Elsevier, vol. 39(C).
    49. Rajib Chowdhury & John A. Doukas, 2022. "Are CEOs to Blame for Corporate Failure? Evidence from Chapter 11 Filings," Review of Corporate Finance, now publishers, vol. 2(1), pages 1-63, March.
    50. Zhu, Xiaoquan & Peng, Hongfeng & Zhang, Zijian, 2020. "The nexus of judicial efficiency, social burden and default risk: Cross-country evidence," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 68(C).
    51. Mariagiovanna Baccara, 2007. "Outsourcing, information leakage, and consulting firms," RAND Journal of Economics, RAND Corporation, vol. 38(1), pages 260-289, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Piperopoulos, Panagiotis & Jimenez-Moro, Eduardo & Yeung, Matthew & Christopoulou, Danai & Ming, Alan Au Kai, 2023. "The impact of exogenous shocks on the innovation performance of firms in the Caribbean small island economies: Quasi-replication of Paunov (2012)," Technological Forecasting and Social Change, Elsevier, vol. 196(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Mariagiovanna Baccara, 2007. "Outsourcing, information leakage, and consulting firms," RAND Journal of Economics, RAND Corporation, vol. 38(1), pages 269-289, March.
    2. Giacomo A. M. Ponzetto, 2008. "Intellectual property rights and efficient firm organization," Economics Working Papers 1254, Department of Economics and Business, Universitat Pompeu Fabra, revised May 2014.
    3. Amiya K. Chakravarty, 2021. "The outsourcing conundrum: Misappropriation of intellectual property in supply chains," Naval Research Logistics (NRL), John Wiley & Sons, vol. 68(2), pages 229-240, March.
    4. Francesca M. Calamunci & Livio Ferrante & Rossana Scebba, 2022. "Closed for mafia: Evidence from the removal of mafia firms on commercial property values," Journal of Regional Science, Wiley Blackwell, vol. 62(5), pages 1487-1511, November.
    5. Ylenia Brilli & Marco Tonello, 2015. "The contemporaneous effect of education on adolescent crime. Mechanisms and evidence from regional divides," CHILD Working Papers Series 41 JEL Classification: I2, Centre for Household, Income, Labour and Demographic Economics (CHILD) - CCA.
    6. Ugur, Mehment & Vivarelli, Marco, 2020. "The role of innovation in industrial dynamics and productivity growth: a survey of the literature," GLO Discussion Paper Series 648, Global Labor Organization (GLO).
    7. Fier, Andreas & Heger, Diana & Hussinger, Katrin, 2005. "Die Wirkungsanalyse staatlicher Förderprogramme durch den Einsatz von Matching- und Selektionsmodellen am Beispiel der Fertigungstechnik," ZEW Discussion Papers 05-09, ZEW - Leibniz Centre for European Economic Research.
    8. Damián Tojeiro-Rivero & Rosina Moreno & Erika Badillo, 2016. "“Breakthrough innovations: The impact of foreign acquisition of knowledge"," IREA Working Papers 201614, University of Barcelona, Research Institute of Applied Economics, revised Nov 2016.
    9. Adriana Camacho & Catherine Rodriguez, 2013. "Firm Exit and Armed Conflict in Colombia," Journal of Conflict Resolution, Peace Science Society (International), vol. 57(1), pages 89-116, February.
    10. Pellegrino, Gabriele & Piva, Mariacristina & Vivarelli, Marco, 2012. "Young firms and innovation: A microeconometric analysis," Structural Change and Economic Dynamics, Elsevier, vol. 23(4), pages 329-340.
    11. Faria, Pedro & Schmidt, Tobias, 2007. "International cooperation on innovation: empirical evidence for German and Portuguese firms," Discussion Paper Series 1: Economic Studies 2007,30, Deutsche Bundesbank.
    12. Carbo-Valverde, Santiago & Rodriguez-Fernandez, Francisco & Saunders, Anthony, 2021. "Underwriting bank bonds: Information sharing, certification and distribution networks," Journal of Corporate Finance, Elsevier, vol. 70(C).
    13. Roberto Ganau & Andrés Rodríguez†Pose, 2018. "Industrial clusters, organized crime, and productivity growth in Italian SMEs," Journal of Regional Science, Wiley Blackwell, vol. 58(2), pages 363-385, March.
    14. John Asker & Alexander Ljungqvist, 2010. "Competition and the Structure of Vertical Relationships in Capital Markets," Journal of Political Economy, University of Chicago Press, vol. 118(3), pages 599-647, June.
    15. Werner Bönte & Lars Wiethaus, 2007. "Knowledge Disclosure and Transmission in Buyer–Supplier Relationships," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 31(4), pages 275-288, December.
    16. Jens Ruhose, 2015. "Microeconometric Analyses on Economic Consequences of Selective Migration," ifo Beiträge zur Wirtschaftsforschung, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 61.
    17. Chen, Sheng-Syan & Kao, Wei-Chuan & Wang, Yanzhi, 2021. "Tax policy and innovation performance: Evidence from enactment of the alternative simplified credit," Journal of Banking & Finance, Elsevier, vol. 125(C).
    18. John S. Howe & Brett C. Olsen, 2009. "Security Choice and Corporate Governance," European Financial Management, European Financial Management Association, vol. 15(4), pages 814-843, September.
    19. Timo Kuosmanen & Yong Tan & Sheng Dai, 2023. "Performance analysis of English hospitals during the first and second waves of the coronavirus pandemic," Health Care Management Science, Springer, vol. 26(3), pages 447-460, September.
    20. Mehmet Ugur & Marco Vivarelli, 2021. "Innovation, firm survival and productivity: the state of the art," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 30(5), pages 433-467, July.

    More about this item

    Keywords

    External Financing; Credit Risk; Information Leakages; CEO's Work Experience;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • K14 - Law and Economics - - Basic Areas of Law - - - Criminal Law

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:idb:brikps:9678. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Felipe Herrera Library (email available below). General contact details of provider: https://edirc.repec.org/data/iadbbus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.