Electoral Accountability and Corruption: Evidence from the Audits of Local Governments

Abstract

We show that political institutions affect corruption levels. We use audit reports in Brazil to construct new measures of political corruption in local governments and test whether electoral accountability affects the corruption practices of incumbent politicians. We find significantly less corruption in municipalities where mayors can get reelected. Mayors with reelection incentives misappropriate 27 percent fewer resources than mayors without reelection incentives. These effects are more pronounced among municipalities with less access to information and where the likelihood of judicial punishment is lower. Overall our findings suggest that electoral rules that enhance political accountability play a crucial role in constraining politician's corrupt behavior. (JEL D72, K42, O17)

Business taxes and the electoral cycle

“…This is clearly an interesting road for future research which goes beyond the aim of our paper though (see e.g. Ferraz and Finan (2011), Gagliarducci and Nannicini (2012), Pettersson-Lidbom (2003) for first empirical steps in this direction). 4…”

Do politicians shirk when reelection is certain? Evidence from the German parliament

“…A prominent recent example is Ferraz and Finan (2011) showing that Brazilian mayors who can be reelected are less corrupt.…”

Corruption in Procurement and the Political Cycle in Tunneling: Evidence from Financial Transactions Data

“…Our work is particularly related to the recent strand of this literature, which provides empirical estimates of social costs of political connections and shows that political connections, in part, determine the allocation of government procurement contracts, (e.g., Cingano and Pinotti 2013;Amore and Bennedsen 2013;Goldman, Rocholl, and So 2013). 1 We also contribute to the empirical literature that attempts to provide systematic evidence of corruption using objective rather than perception-based measures (e.g., Di Tella and Schargrodsky 2003;Reinikka and Svensson 2004;Bertrand et al 2007a;Olken 2007;Fisman and Miguel 2007;Butler, Fauver, and Mortal 2009;Caselli and Michaels 2009;Cheung, Rau, and Stouraitis 2011;Ferraz and Finan 2011).…”