Too much of a good thing? The concave impact of corruption on firm performance

• Type: Article in International Scientific Journal
• Date: 2024

Authors

Lourenço, Diogo (Author) FEP; Cerdeira, Jorge (Author) FLUP

Journal

Title: Cogent Business & Management

Vol. 11 No. 1

ISSN: 2331-1975

Publisher: Taylor & Francis

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Other information

Authenticus ID: P-011-3E3

DOI: 10.1080/23311975.2024.2378916

Abstract (EN): We investigate whether the impact of corruption on firm-level performance exhibits a concave pattern. We measured corruption using a continuous variable of firm-level bribe payments from the World Bank Enterprise Surveys. Our dataset includes 23 327 firms from 140 developing and emerging countries from 2006 to 2020. Using four measures of firm performance and instrumental variables estimation, we find that corruption has a negative linear impact on measures directly linked to market performance but a concave impact on measures focusing on inner processes. Further, larger firms and foreign firms are less negatively impacted by corruption. Importantly, controlling for a concave relationship amplifies the differences across different types of firms.

Language: English

Type (Professor's evaluation): Scientific

No. of pages: 17