Lying about firm performance: Evidence from a survey in Nigeria

George Clarke

MPRA Paper from University Library of Munich, Germany

Abstract: It is difficult to be sure that managers in developing countries report financial information accurately and truthfully during firm surveys. The most common concern is that managers might under-report performance to avoid attracting attention from the tax authorities or corrupt bureaucrats. Using a method developed in the literature on corruption, this paper identifies managers who appear to be reticent or deceptive and compares their answers with the answers of non-reticent managers. The paper shows that reticent managers report that their firms are more, not less, productive than non-reticent managers. The paper then assesses possible reasons for this, finding that the most likely explanation is that reticent managers exaggerate performance so that they or their firms look good. Because past studies have found that reticent managers appear to lie about other aspects of firm and manager behavior—including underreporting corruption—this suggests that it will be difficult to fully assess how these behaviors affect firm performance unless reticence is controlled for.

Keywords: Reticence; Nigeria; Firm Surveys; Corruption; Labor Productivity (search for similar items in EconPapers)
JEL-codes: C42 D73 O12 (search for similar items in EconPapers)
Date: 2011-12-11
New Economics Papers: this item is included in nep-afr, nep-eff and nep-iue
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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