Should one hire a corrupt CEO in a corrupt country?

Maxim Mironov

Journal of Financial Economics, 2015, vol. 117, issue 1, 29-42

Abstract: This paper examines the interaction between the propensity to corrupt (PTC) and firm performance. Using a unique data set of Moscow traffic violations, I construct the PTC of every Muscovite with a driver׳s license. Next, I determine the PTC for the top management of 58,157 privately held firms. I find that a 1 standard deviation increase in management PTC corresponds to a 3.6% increase in income diversion and that firms with corrupt management significantly outperform their counterparts. This study contributes to the literature that characterizes corruption using objective (instead of perception-based) measures and provides evidence regarding the positive aspects of corruption at the firm level.

Keywords: Corruption; Tax evasion; CEO; Firm performance (search for similar items in EconPapers)
JEL-codes: D73 G30 G34 G38 H11 H26 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (46)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinec:v:117:y:2015:i:1:p:29-42

DOI: 10.1016/j.jfineco.2014.03.002

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