Does the Mafia Hire Good Accountants?

55 Pages Posted: 18 Nov 2021 Last revised: 16 Dec 2021

See all articles by Pietro A. Bianchi

Pietro A. Bianchi

Florida International University

Jere R. Francis

Maastricht University

Antonio Marra

Bocconi University - Department of Accounting

Nicola Pecchiari

Bocconi University - Department of Accounting

Date Written: November 5, 2021

Abstract

We investigate if organized crime groups (OCG) are able to hire good accountants. We use data about criminal records to identify Italian accountants with connections to OCG. While the work accountants do for the OCG ecosystem is not observable, we can determine if OCG hire “good” accountants by assessing the overall quality of their work as external monitors of legal businesses. We find that firms serviced by accountants with OCG connections have higher quality audited financial statements compared to a control group of firms serviced by accountants with no OCG connections. The findings provide evidence OCG are able to hire good accountants, despite the downside risk of OCG associations. Results are robust to controls for self-selection, for other determinants of auditor expertise, direct connections of directors and shareholders to OCG, and corporate governance mechanisms that might influence auditor choice and audit quality.

Keywords: accountant connections to organized crime, accountant criminal record, criminal investigations, financial reporting quality

JEL Classification: G31,G32,G38, K42, K49

Suggested Citation

Bianchi, Pietro A. and Francis, Jere R. and Marra, Antonio and Pecchiari, Nicola, Does the Mafia Hire Good Accountants? (November 5, 2021). Available at SSRN: https://ssrn.com/abstract=3957650 or http://dx.doi.org/10.2139/ssrn.3957650

Pietro A. Bianchi (Contact Author)

Florida International University ( email )

University Park
11200 SW 8th Street
Miami, FL 33199
United States

HOME PAGE: http://https://business.fiu.edu/faculty/expert-guides.cfm?FlagDirectory=Display&Emp=bianchip

Jere R. Francis

Maastricht University ( email )

P.O. Box 616
Maastricht, 6200 MD
Netherlands

Antonio Marra

Bocconi University - Department of Accounting ( email )

Via Roentgen 1
Milan, 20136
Italy

Nicola Pecchiari

Bocconi University - Department of Accounting ( email )

Via Roentgen 1
Milan, 20136
Italy

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