Do Government Audits Reduce Corruption? Estimating the Impacts of Exposing Corrupt Politicians

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may AbstractPolitical corruption is considered a major impediment to economic development, and yet it remains pervasive throughout the world. This paper examines the extent to which government audits of public resources can reduce corruption by enhancing political and judiciary accountability. We do so in the context of Brazil's anti-corruption program, which randomly audits municipalities for their use of federal funds. We find that being audited in the past reduces future corruption by 8 percent, while also increasing the likelihood of experiencing a subsequent legal action by 20 percent. We interpret these reduced-form findings through a political agency model, which we structurally estimate. Based on our estimated model, the reduction in corruption comes mostly from the audits increasing the perceived threat of the non-electoral costs of engaging in corruption.

Do the Government Expenditure Audits Correlates With Corruption in the Public Procurement?

“…However, because partners work with appointed and on behalf of local governments, irregularities occur in the name of local governments (both as local government officials and local government partners or both). In several previous studies, corruption was not separated from officials or partners (Avis et al, 2018;Ferraz & Finan, 2011;Olken, 2007).…”

“…One of the efforts to eradicate corruption is to determine the right combination of enforcement efforts and punishment levels (Becker & Stigler, 1974). One of the law enforcement efforts is an audit of state financial management (Avis, Ferraz, & Finan, 2018).…”

“…Research on the relationship of the audit with the level of corruption itself has not produced an understanding of consensus. Avis et al (2018) and Olken (2007) concluded that audits affected future local government corruption decisions. Bobonis, Fuertes, and Schwabe (2016), in their research, found that the audit impact on the level of corruption only occurred in the short term.…”

The strategy of institutional reform of the supreme audit institution: the case of Ukraine

“…For instance, Avis, Ferraz and Finan (2018), based on the analysis the results of the Brazil's anticorruption program, which randomly audits municipalities for their use of federal funds, claim that being audited in the past reduces future corruption by 8%, while also increasing the likelihood of experiencing a subsequent legal action by 20%.…”

“…Thus, developing an effective strategy for institutional reform of the Accounting Chamber of Ukraine as the Supreme Audit Institution should take into account the need to maintain social interaction and confidence (AVIS, et al, 2018;BLIND, 2007;BRUSCA, et al, 2017;HETHERINGTON, 1998) The research was carried out from March 2014 to September 2015.…”