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Anti‐Mafia Police Actions, Criminal Firms, and Peer Firm Tax Avoidance

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Listed:
  • JUSTIN CHIRCOP
  • MICHELE FABRIZI
  • PATRIZIA MALASPINA
  • ANTONIO PARBONETTI

Abstract

Mafia firms introduce distortions in the markets in which they operate, increasing the cost of doing business for peer firms. We investigate whether peers respond by increasing their tax avoidance and thus increasing funds available to compete with the Mafia firms. Using a sample of Italian anti‐Mafia police actions that resulted in the removal of Mafia firms and a difference‐in‐differences approach, we find that peers reduce their tax avoidance following these actions. We further show that, following anti‐Mafia police actions, peer firms improve their performance and increase capital investment while enjoying a reduction in the cost of raw materials. Overall, our results highlight the microlevel channels through which Mafia can affect firm outcomes and local economies.

Suggested Citation

  • Justin Chircop & Michele Fabrizi & Patrizia Malaspina & Antonio Parbonetti, 2023. "Anti‐Mafia Police Actions, Criminal Firms, and Peer Firm Tax Avoidance," Journal of Accounting Research, John Wiley & Sons, Ltd., vol. 61(1), pages 243-277, March.
    • Handle: RePEc:bla:joares:v:61:y:2023:i:1:p:243-277
    DOI: 10.1111/1475-679X.12455
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    2. Cheng, Maoyong & Li, Zhenjun & Kong, Dongmin, 2025. "Analysts' escape: The information cost of anti-organized crime," International Review of Financial Analysis, Elsevier, vol. 106(C).
    3. Chen, Yinying & Yin, Liang & Hu, Shiyang & Li, Xiang, 2025. "Biodiversity conservation and corporate environmental information disclosure: Evidence from a quasi-natural experiment in China," International Review of Financial Analysis, Elsevier, vol. 102(C).
    4. Shiyang Hu & Yulei Li & Wenhao Tan & Cheng Xiang, 2025. "One Move, Two Gains: Commercial Kickbacks Suppression and Corporate Tax Avoidance," Journal of Business Ethics, Springer, vol. 202(1), pages 117-140, November.
    5. Luca Menicacci, 2025. "Real effects of investment tax incentives: evidence from Italian private firms," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 29(2), pages 409-451, June.

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