Revealing corruption: Firm and worker level evidence from Brazil

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

Journal of Financial Economics, 2022, vol. 143, issue 3, 1097-1119

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. 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.

Keywords: Firms; Corruption; Brazil; Investment; Government contracts (search for similar items in EconPapers)
JEL-codes: D21 D22 D73 E22 L10 L22 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

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Related works:
Working Paper: 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)
Working Paper: Revealing Corruption: Firm and Worker Level Evidence from Brazil (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinec:v:143:y:2022:i:3:p:1097-1119

DOI: 10.1016/j.jfineco.2021.12.013

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