Revealing Corruption: Firm and Worker Level Evidence from Brazil

Produced by: 
Universidad del Rosario
Available from: 
January 2021
Paper author(s): 
Emanuele Colonnelli
Spyridon Lagaras
Jacopo Ponticelli
Mounu Prem
Margarita Tsoutsoura
Topic: 
Financial Economics
Year: 
2021

We study how the disclosure of corrupt practices affects firms and their employees. We construct novel firm-level measures of involvement in corrupt practices using randomized audits and public procurement suspensions in Brazil. On average, exposed firms grow larger after the audits. However, this result masks large heterogeneity depending on the degree of firm involvement in the corruption scheme. Using contract-, loan-, and worker- level data, we show that highly corrupt firms suffer after anti-corruption initiatives, while other exposed firms grow by changing their investment strategy when shifting away from doing business with the government.

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