"Anti-mafia police actions, criminal firms, and peer firm tax avoidance"

Mafia firms introduce distortions in the markets in which they operate, increasing the cost of doing business for peer firms. Using a sample of Italian anti-Mafia police actions that resulted in the removal of Mafia firms, the authors find that peers reduce their tax avoidance following these anti-Mafia actions. Moreover, peer firms improve their performance and increase capital investment while enjoying a reduction in the cost of raw materials after the removal of Mafia firms. Overall, these new results highlight the micro-level channels through which Mafia can affect firm outcomes and local economies.

Authors:
Justin Chircop (Lancaster University School of Management)
Michele Fabrizi (dSEA University of Padova)
Patrizia Malaspina (dSEA University of Padova)
Antonio Parbonetti (dSEA University of Padova)

Read their "Journal of Accounting Research" article here