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Revealing Corruption: Firm and Worker Level Evidence from Brazil

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  • Colonnelli, Emanuele
  • Lagaras, Spyridon
  • Ponticelli, Jacopo
  • Prem, Mounu
  • Tsoutsoura, Margarita

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

  • Colonnelli, Emanuele & Lagaras, Spyridon & Ponticelli, Jacopo & Prem, Mounu & Tsoutsoura, Margarita, 2020. "Revealing Corruption: Firm and Worker Level Evidence from Brazil," SocArXiv asrz4, Center for Open Science.
  • Handle: RePEc:osf:socarx:asrz4
    DOI: 10.31219/osf.io/asrz4
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    JEL classification:

    • G - Financial Economics
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption

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