Anti‐Mafia Police Actions, Criminal Firms, and Peer Firm Tax Avoidance

Justin Chircop, Michele Fabrizi, Patrizia Malaspina, Antonio ParbonettiAccounting税务研究UTD24

Journal of Accounting Research2022-07-13Lancaster University; University of PaduaDOI

Citations27

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 microlevel channels through which Mafia can affect firm outcomes and local economies.

BusinessTax avoidanceSample (material)Investment (military)Monetary economicsIndustrial organizationDouble taxationFinanceEconomicsLawTaxation and Compliance StudiesCorporate Taxation and Avoidance