Home > Research > Publications & Outputs > Anti‐mafia police actions, criminal firms, and ...

Links

Text available via DOI:

View graph of relations

Anti‐mafia police actions, criminal firms, and peer firm tax avoidance

Research output: Contribution to Journal/MagazineJournal articlepeer-review

Forthcoming
Close
<mark>Journal publication date</mark>3/05/2022
<mark>Journal</mark>Journal of Accounting Research
Publication StatusAccepted/In press
<mark>Original language</mark>English

Abstract

Mafia firms introduce distortions in the markets in which they operate, increasing the cost of doing business for peer firms. We investigate whether peers respond by increasing their tax avoidance and thus increasing funds available to compete with the Mafia firms. Using a sample of Italian anti-Mafia police actions that resulted in the removal of Mafia firms and a difference-in-differences approach, we find that peers reduce their tax avoidance following these actions. We further show that, following anti-Mafia police actions, peer firms improve their performance and increase capital investment while enjoying a reduction in the cost of raw materials. Overall, our results highlight the micro-level channels through which Mafia can affect firm outcomes and local economies.