Predictable Corruption and Firm Investment

Evidence from a Natural Experiment and Survey of Cambodian Entrepreneurs

Bibliographic Data

ID12802499
AuthorsEdmund J Malesky (0000-0001-5737-9195, corresponding author), Krislert Samphantharak
Year2008
Volume3
Issue3
Pages227-267
Publication date2008-10-24
Peer ReviewedYes
Open AccessNo
TypeARTICLE
VenueQuarterly Journal of Political Science (JOURNAL)
Journal identifiersISSN: 1554-0626 • E-ISSN: 1554-0634
PublisherNow Publishers (PUBLISHER • NL)
DOI10.1561/100.00008013
OpenAlexW3122000391
LanguageEN
Citations received24
References cited29

This paper utilizes a unique dataset of 500 firms in ten Cambodian provinces and a natural experiment to test a long-held convention in political economy that the predictability of a corruption is at least as important for firm investment decisions as the amount of bribes a firm must pay, provided the bribes are not prohibitively expensive. Our results suggest that this hypothesis is correct. Firms exposed to a shock to their bribe schedules by a change in governor invest significantly less in subsequent periods, as they wait for new information about their new chief executive. Furthermore, the amount of corruption (both measured by survey data and proxied by the number of commercial sex workers) is significantly lower in provinces with new governors. Our findings are robust to a battery of firm-level controls and province-level investment climate measures

Business · Convention · Demographic economics · Economics · Governor · Investment (military · Labour economics · Language change · Natural experiment · Political science · Politics · Predictability · Shock (circulatory · Survey data collection · Corporate Finance and Governance · Corruption and Economic Development · Economic Growth and Development · Engineering · Law

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