Corruption and Firms

85 Pages Posted: 14 Mar 2017 Last revised: 10 Dec 2021

See all articles by Emanuele Colonnelli

Emanuele Colonnelli

University of Chicago - Booth School of Business

Mounu Prem

Einaudi Institute for Economics and Finance (EIEF)

Date Written: December 25, 2020


We estimate the causal real economic effects of a randomized anti- corruption crackdown on local governments in Brazil using rich micro-data on corruption and firms. After anti-corruption audits, municipalities experience an in- crease in the number of firms concentrated in sectors most dependent on government relationships. Through the estimation of geographic spillovers and additional tests, we show that audits operate via both a direct detection effect as well as through indirect deterrence channels. Politically connected firms suffer after the audits. Our estimates indicate the anti-corruption program generates significant local multipliers which are consistent with the presence of a large corruption tax on government-dependent firms.

Keywords: Corruption, Firms, Audits, Public Procurement, Misallocation, Labor Reallocation, Political Connections

JEL Classification: D22, D72, D73, G30, G38, H57, K00, L22, O10, O43

Suggested Citation

Colonnelli, Emanuele and Prem, Mounu, Corruption and Firms (December 25, 2020). Available at SSRN: or

Emanuele Colonnelli (Contact Author)

University of Chicago - Booth School of Business ( email )


Mounu Prem

Einaudi Institute for Economics and Finance (EIEF) ( email )

Via Due Macelli, 73
Rome, 00187

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