Revealing Corruption: Firm and Worker Level Evidence from Brazil
53 Pages Posted: 9 Mar 2017 Last revised: 30 Dec 2020
Date Written: December 29, 2020
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.
Keywords: Corporate Misconduct, Public Procurement, Firm Growth
JEL Classification: D3, O1, D73, H57, D22
Suggested Citation: Suggested Citation