Lying about firm performance: Evidence from a survey in Nigeria
AbstractIt is difficult to be sure that managers in developing countries report financial information accurately and truthfully during firm surveys. The most common concern is that managers might under-report performance to avoid attracting attention from the tax authorities or corrupt bureaucrats. Using a method developed in the literature on corruption, this paper identifies managers who appear to be reticent or deceptive and compares their answers with the answers of non-reticent managers. The paper shows that reticent managers report that their firms are more, not less, productive than non-reticent managers. The paper then assesses possible reasons for this, finding that the most likely explanation is that reticent managers exaggerate performance so that they or their firms look good. Because past studies have found that reticent managers appear to lie about other aspects of firm and manager behavior—including underreporting corruption—this suggests that it will be difficult to fully assess how these behaviors affect firm performance unless reticence is controlled for.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 35382.
Date of creation: 11 Dec 2011
Date of revision:
Reticence; Nigeria; Firm Surveys; Corruption; Labor Productivity;
Find related papers by JEL classification:
- D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
- C42 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Survey Methods
- O12 - Economic Development, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
This paper has been announced in the following NEP Reports:
- NEP-AFR-2011-12-19 (Africa)
- NEP-ALL-2011-12-19 (All new papers)
- NEP-EFF-2011-12-19 (Efficiency & Productivity)
- NEP-IUE-2011-12-19 (Informal & Underground Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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Electronic Working Papers, University of Maryland, Department of Economics
05-001, University of Maryland, Department of Economics.
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- de Mel, Suresh & McKenzie, David J. & Woodruff, Christopher, 2009. "Measuring microenterprise profits: Must we ask how the sausage is made?," Journal of Development Economics, Elsevier, Elsevier, vol. 88(1), pages 19-31, January.
- Clarke, George, 2012. "Do reticent managers lie during firm surveys?," MPRA Paper 37634, University Library of Munich, Germany.
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