Assessing the Effects of Anti-corruption Law on Entrepreneurial Finance: Evidence from Latin America

Francesca Battaglia, Marika Carboni, Antonella Francesca Cicchiello and Stefano MonferrÃ

Journal of Emerging Market Finance, 2021, vol. 20, issue 1, 48-78

Abstract: Corruption normally causes distrust among investors and can negatively affect investments. Particularly in Latin America, decline of investments is one of the most significant problems. In such a context, anti-corruption laws can both fight corruption and promote business, restoring investors’ trust. In this article, we ask whether the introduction of an anti-corruption framework affecting both the public and private spheres is able to increase investors’ confidence in a new form of investment, that is, equity crowdfunding. By using a unique database, with combined information from different platforms in Brazil, Chile and Mexico, we study the population of 492 projects between 2013 and 2017. Implementing a set of linear probability regressions, we find that the new Mexican anti-corruption law has increased the probability of success of equity crowdfunding projects in this country, compared to Brazilian and Chilean projects, suggesting the existence of a causal relation between anti-corruption rules and investments in a highly perceived corrupt environment further characterised by a low level of investor protection. JEL Classification: G23, G28, K22, L26

Keywords: Corruption; regulation; equity crowdfunding; entrepreneurial finance; Latin America (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:sae:emffin:v:20:y:2021:i:1:p:48-78

DOI: 10.1177/0972652720932783

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