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Revealing Corruption: Firm and Worker Level Evidence from Brazil

Author

Listed:
  • M Prem
  • E Colonnelli
  • S Lagaras
  • J Ponticelli
  • M Tsoutsoura

Abstract

We study how the disclosure of corrupt practices affects firms and their employees. We construct novel firm-level measures of involvement in corrupt practices using randomized audits and public procurement suspensions in Brazil. On average, exposed firms grow larger after the audits. However, this result masks large heterogeneity depending on the degree of firm involvement in the corruption scheme. Using contract-, loan-, and worker- level data, we show that highly corrupt firms suffer after anti-corruption initiatives, while other exposed firms grow by changing their investment strategy when shifting away from doing business with the government.

Suggested Citation

  • M Prem & E Colonnelli & S Lagaras & J Ponticelli & M Tsoutsoura, 2021. "Revealing Corruption: Firm and Worker Level Evidence from Brazil," Documentos de Trabajo 18673, Universidad del Rosario.
    • Handle: RePEc:col:000092:018673
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    Citations

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    Cited by:

    1. is not listed on IDEAS
    2. Quan, Xiaofeng & Zhang, Ke & Zhong, Rui & Zhu, Yuxiang, 2023. "Political corruption and green innovation," Pacific-Basin Finance Journal, Elsevier, vol. 82(C).
    3. Allen N. Berger & Cristina Ortega & Matias Ossandon Busch & Raluca Roman, 2024. "Banking on Deforestation: The Cost of Nonenforcement," Working Papers 24-21, Federal Reserve Bank of Philadelphia.
    4. Nguyen, Hieu Quang, 2023. "Corruption, political connection, and firm investments," International Review of Financial Analysis, Elsevier, vol. 90(C).
    5. Eleni Zafeiriou & Alexandros Garefalakis & Ioannis Passas & Konstantina Ragazou, 2023. "Illicit and Corruption Mitigation Strategy in the Financial Sector: A Study with a Hybrid Methodological Approach," Sustainability, MDPI, vol. 15(2), pages 1-16, January.
    6. Julia Fonseca & Adrien Matray, 2022. "Financial Inclusion, Economic Development, and Inequality: Evidence from Brazil," Working Papers 308, Princeton University, Department of Economics, Center for Economic Policy Studies..
    7. Arellano-Bover, Jaime & De Simoni, Marco & Guiso, Luigi & Macchiavello, Rocco & Marchetti, Domenico J. & Prem, Mounu, 2024. "Mafias and Firms," SocArXiv sr6ep, Center for Open Science.
    8. Miriam Venturini, 2023. "The Imperfect Union: Labor Racketeering, Corruption Exposure, and Its Consequences," Working Papers 202407, University of California at Riverside, Department of Economics.
    9. Gallego, Jorge & Prem, Mounu & Vargas, Juan F., 2022. "Predicting Politicians' Misconduct: Evidence from Colombia," SocArXiv 5dp8t, Center for Open Science.
    10. repec:osf:socarx:5dp8t_v1 is not listed on IDEAS
    11. Nicolae Stef, 2021. "Institutions and corporate financial distress in Central and Eastern Europe," European Journal of Law and Economics, Springer, vol. 52(1), pages 57-87, August.
    12. repec:osf:socarx:sr6ep_v1 is not listed on IDEAS

    More about this item

    Keywords

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    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement
    • H83 - Public Economics - - Miscellaneous Issues - - - Public Administration
    • K00 - Law and Economics - - General - - - General (including Data Sources and Description)
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General

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