Revealing Corruption: Firm and Worker Level Evidence from Brazil

53 Pages Posted: 9 Mar 2017 Last revised: 30 Dec 2020

See all articles by Emanuele Colonnelli

Emanuele Colonnelli

University of Chicago - Booth School of Business

Spyridon Lagaras

University of Pittsburgh, Katz Graduate Business School

Jacopo Ponticelli

Northwestern University - Kellogg School of Management; NBER

Mounu Prem

Universidad del Rosario

Margarita Tsoutsoura

Cornell University; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI); National Bureau of Economic Research (NBER)

Date Written: December 29, 2020

Abstract

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

Colonnelli, Emanuele and Lagaras, Spyridon and Ponticelli, Jacopo and Prem, Mounu and Tsoutsoura, Margarita, Revealing Corruption: Firm and Worker Level Evidence from Brazil (December 29, 2020). Available at SSRN: https://ssrn.com/abstract=2929625 or http://dx.doi.org/10.2139/ssrn.2929625

Emanuele Colonnelli

University of Chicago - Booth School of Business ( email )

HOME PAGE: http://emanuelecolonnelli.com

Spyridon Lagaras

University of Pittsburgh, Katz Graduate Business School ( email )

3950 Roberto Clemente Dr
334 Mervis Hall
Pittsburgh, PA Allegheny 15260
United States

Jacopo Ponticelli (Contact Author)

Northwestern University - Kellogg School of Management ( email )

2211 Campus Dr
Evanston, IL 60208
United States

HOME PAGE: http://www.kellogg.northwestern.edu/faculty/ponticelli/index.html

NBER ( email )

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Cambridge, MA 02138
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Mounu Prem

Universidad del Rosario ( email )

Casa Pedro Fermín
Calle 14 # 4-69
Bogota
Colombia

Margarita Tsoutsoura

Cornell University ( email )

Ithaca, NY 14853
United States

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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