Érica Aparecida Ribeiro

The main goal of this dissertation is to identify the impact of competition with the informal sector and foreign capital on the likelihood of firms bribing, taking into account the institutional, economic and social characteristics of the countries in which firms settle. Among the characteristics of companies that have been the target of previous studies, the understanding of the effect of competition with the informal sector and foreign capital on the likelihood of companies paying bribes is not yet definitive. With regard to competition with the informal sector, it is known that the existence of unregistered companies is related to fundamental characteristics of the countries, such as the low level of economic development and the existence of weak institutions and heavy and or poorly elaborated regulations that, in turn, are related to high levels of corruption in countries. On the foreign capital variable, literature also diverges on its real effect on the probability of firms bribing, but part of it asserts that firms adapt to the culture of the countries in which they settle, so that they have the same propensity to bribe as domestic companies. Due to the hierarchical characteristic of the data, which relates variables at country and firm level, multilevel logistic regression was used. The main results for the sample of 31.222 companies from 88 countries indicate that, on average, competing with informal firms is associated with an increase in the probability of firms bribing, while foreign-owned firms do not bribe more or less than the domestic ones. The level of bureaucratic quality, political stability, and country per capita GDP are negatively correlated with the likelihood of firms bribing. In addition, the results also indicate that the company’s belief that the country’s justice system is fair, impartial and incorruptible significantly reduces the chances of companies engaging in corrupt transactions. When dividing the sample into 6 regions, it is seen that competing with the informal sector has the same positive effect on the chances of firms bribing in 5 of the 6 regions analyzed. With regard to foreign capital, this is statistically insignificant in all regions, while improving the bureaucratic quality of the countries reduces the chances of bribing only of companies located in the Middle East and North Africa. Similarly, rising per capita GDP is associated with a reduction in firms chances of bribing only in Eastern Europe and Central Asia, and greater political stability is related to lower firms chances of bribing only in Africa and Eastern Europe and Central Asia. These differences between regions indicate that homogenous anti-corruption policies from international institutions are now very effective, suggesting that such policies should consider regional aspects to produce more signficant long-term effects.