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Lying about firm performance: Evidence from a survey in Nigeria

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  • Clarke, George

Abstract

It 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.

Suggested Citation

  • Clarke, George, 2011. "Lying about firm performance: Evidence from a survey in Nigeria," MPRA Paper 35382, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:35382
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    File URL: https://mpra.ub.uni-muenchen.de/35382/1/MPRA_paper_35382.pdf
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    References listed on IDEAS

    as
    1. 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, vol. 88(1), pages 19-31, January.
    2. Recanatini, Francesca & Wallsten, Scott J. & Lixin Colin Xu, 2000. "Surveying surveys and questioning questions - learning from World Bank experience," Policy Research Working Paper Series 2307, The World Bank.
    3. Gerty J. L. M. Lensvelt-Mulders & Joop J. Hox & Peter G. M. van der Heijden & Cora J. M. Maas, 2005. "Meta-Analysis of Randomized Response Research," Sociological Methods & Research, , vol. 33(3), pages 319-348, February.
    4. Omar Azfar & Peter Murrell, 2009. "Identifying Reticent Respondents: Assessing the Quality of Survey Data on Corruption and Values," Economic Development and Cultural Change, University of Chicago Press, vol. 57(2), pages 387-411, January.
    5. Jensen, Nathan M & Rahman, Aminur, 2011. "The silence of corruption : identifying underreporting of business corruption through randomized response techniques," Policy Research Working Paper Series 5696, The World Bank.
    6. George R.G. Clarke & James Habyarimana & Michael Ingram & David Kaplan & Vijaya Ramachandran, 2007. "An Assessment of the Investment Climate in South Africa," World Bank Publications, The World Bank, number 6738, April.
    7. Bianca Clausen & Aart Kraay & Peter Murrell, 2011. "Does Respondent Reticence Affect the Results of Corruption Surveys? Evidence from the World Bank Enterprise Survey for Nigeria," Chapters,in: International Handbook on the Economics of Corruption, Volume Two, chapter 15 Edward Elgar Publishing.
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    Cited by:

    1. Thorben C. Kundt & Florian Misch & Birger Nerré, 2017. "Re-assessing the merits of measuring tax evasion through business surveys: an application of the crosswise model," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 24(1), pages 112-133, February.
    2. Friesenbichler, Klaus S. & Selenko, Eva & Clarke, George R.G., 2015. "How much of a nuisance is greasing the palms? A study on job dedication and attitudes towards corruption reports under answer bias control," MPRA Paper 67331, University Library of Munich, Germany.
    3. Clarke, George, 2012. "Do reticent managers lie during firm surveys?," MPRA Paper 37634, University Library of Munich, Germany.

    More about this item

    Keywords

    Reticence; Nigeria; Firm Surveys; Corruption; Labor Productivity;

    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, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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