Revealing Corruption: Firm and Worker Level Evidence from Brazil
Authors
Colonnelli, Emanuele
Lagaras, Spyridon
Ponticelli, Jacopo
Prem, Mounu
Tsoutsoura, Margarita
Editor
Publication date
2021-08-05
Document language
eng
Publisher
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Abstract
We study how the disclosure of corrupt practices affects firms. We construct novel firm-level measures of involvement in corrupt practices using randomized audits of public procurement in Brazil. On average, firms exposed by the anti-corruption program grow larger after the audits, despite experiencing a decrease in procurement contracts. Using investment-, loan-, and worker- level data, we show that exposed firms adapt to the loss of government contracts by changing their investment strategy. They increase capital investment and borrow more to finance such investment, while we see no change in their internal organization. We provide qualitative support to our results by conducting new face-to-face surveys with business owners of government-dependent firms.
Description
Códigos JEL
G - Financial Economics, D73 - Bureaucracy; Administrative Processes in Public Organizations; Corruption
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Keywords
Anti-corruption program, Audits, Corruption, Firms, Brazil
