Revealing Corruption: Firm and Worker Level Evidence from Brazil

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

No 29627, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We study how the disclosure of corrupt practices affects the growth of firms involved in illegal interactions with the government 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. We manually collect new data on the details of thousands of corruption cases, through which we uncover a large heterogeneity in our firm-level effects depending on the degree of involvement in corruption cases. Using investment-, loan-, and worker- level data, we show that the average 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 there is 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.

JEL-codes: D73 G30 H57 O10 (search for similar items in EconPapers)
Date: 2022-01
New Economics Papers: this item is included in nep-acc, nep-cta, nep-lam and nep-law
Note: CF DEV POL
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Citations: View citations in EconPapers (13)

Published as Emanuele Colonnelli & Spyridon Lagaras & Jacopo Ponticelli & Mounu Prem & Margarita Tsoutsoura, 2022. "Revealing corruption: Firm and worker level evidence from Brazil," Journal of Financial Economics, vol 143(3), pages 1097-1119.

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Related works:
Journal Article: Revealing corruption: Firm and worker level evidence from Brazil (2022)
Working Paper: Revealing Corruption: Firm and Worker Level Evidence from Brazil (2021)
Working Paper: Revealing Corruption: Firm and Worker Level Evidence from Brazil (2021)
Working Paper: Revealing Corruption: Firm and Worker Level Evidence from Brazil (2020)
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