What happens in criminal firms after godfather management removal? Judicial administration and firms’ performance

Abstract

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The Economic Impact of Organized Crime Infiltration in the Legal Economy: Evidence from the Judicial Administration of Organized Crime Firms

“…For a detailed analysis of the legal framework and the implications of judicial administration seeDonato et al (2013) andCalamunci (2019) 5 The Italian companies that are required to deposit the balance sheet are the limited companies.6 Given the large variation and the potential problem of mis-reporting, in the empirical analysis we follow the literature and we winsorize the outcome variables.…”

Closed for mafia: Evidence from the removal of mafia firms on commercial property values

“…Policy implications are straightforward and suggest that antimafia measures turn out to be effective when they hit the core of organized crime activities, that is, their economic interests. However, the fact that a considerable percentage of the firms ends up being either foreclosed or sold at the end of the judicial process signals difficulties in the management of former mafia businesses and their reconversion into legitimate enterprises (see Cabras & Meli, 2017; F. M. Calamunci, 2022 for details). This casts some doubts on the thorough effectiveness of the reassignment policy insofar as it leads to a wasted potential in terms of production and employment opportunities.…”

“…For a comprehensive examination of the legal framework and the economic implications of judicial administration see Donato et al (2013) and F. M. Calamunci (2022). owned firms that have been seized and confiscated can be (1) offered for rent to private and public companies only if there is a good chance of keeping the business running; (2) reassigned, under a bailment contract, to former employees of the confiscated company; (3) put up for sale to anyone interested in taking over the business; or (4) destined to foreclosure, in which case the proceeds go to the restoration of mafia victims.…”

“…The existence of these economic advantages is corroborated by the fact that mafia companies are put under a strain when operating within the law, as confirmed by their profitability and efficiency levels deteriorating (F. M Calamunci, 2022),. and most of them ending up in foreclosure(Ferrante, Fontana, et al, 2021).…”

The Coercive Power of Mafia Reputation on Trade Credit

“…By dropping them from the sample, we can better underpin the representative bias associated with mafia surnames. 23 Following prior studies (e.g., Calamunci and Drago, 2020;Calamunci, 2022), we detect firms subject to legal procedures from AIDA and dropped them from the sample. 24 In addition, we removed from the final sample firms with zero values for both account payables and account receivables since we are aware that missing data on trade credit at the firm level could sometimes be recorded as zeros (Coricelli and Frigerio, 2019).…”