Are Disclosures a Panacea for Corruption? Underassessment of Politicians' Assets

Abstract

Electoral accountability, a cornerstone of a well-functioning democracy, relies on the availability of information that enables voters to evaluate the performance of politicians. However, even in the absence of censorship, politicians can manipulate information that could suggest corrupt practices. Using the unique institutional setting of South Korea, where politicians are required to disclose their asset holdings and wealth annually, we find that properties owned by politicians are systematically undervalued in official assessments. However, our analysis of the universe of land transactions reveals significant increases in the market values of these properties. This underassessment obscures the true extent of wealth accumulation by politicians during their tenure. To isolate these effects, we analyze address-level data on politicians' land holdings and compare properties owned by winners and losers in closely contested elections. Our findings suggest that mandated information disclosures, a key element of anti-corruption legislative efforts in many countries, are undermined when politicians can influence their content.