The Economic Consequences of Criminal Firms

Presented at the 2019 Global Issues in Accounting Conference at Chicago Booth

50 Pages Posted: 5 Sep 2019 Last revised: 17 Nov 2019

See all articles by Michele Fabrizi

Michele Fabrizi

University of Padua

Patrizia Malaspina

University of Padua

Antonio Parbonetti

University of Padua

Date Written: December 18, 2017

Abstract

This paper investigates the economic consequences of firms connected to organized crime (criminal firms) and shows that when a criminal firm is eliminated from an industry, the performance of non-criminal competitors significantly increases. We also show that the positive effect on the performance of non-criminal competitors after the elimination of the criminal competitor includes improved efficiency and reduced procurement costs. Finally, we document that financially constrained firms benefit the most from the elimination of the criminal competitors and that the presence of criminal firms reduces the level of investment of peers firms.

Keywords: organized crime, competition, performance, Mafia, corporate connections

JEL Classification: M10, M41, G30

Suggested Citation

Fabrizi, Michele and Malaspina, Patrizia and Parbonetti, Antonio, The Economic Consequences of Criminal Firms (December 18, 2017). Presented at the 2019 Global Issues in Accounting Conference at Chicago Booth. Available at SSRN: https://ssrn.com/abstract=3444839 or http://dx.doi.org/10.2139/ssrn.3444839

Michele Fabrizi (Contact Author)

University of Padua ( email )

Via del Santo, 33
Padova, Padova 35123
Italy

Patrizia Malaspina

University of Padua ( email )

Via 8 Febbraio, 2
Padova, Vicenza 35122
Italy

Antonio Parbonetti

University of Padua ( email )

Via del Santo 33
Padova, 35123
Italy
+39 049 8274261 (Phone)

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