The Persistence of Corruption in Brazil

Author: Rita Ramalho
Source: The World Bank, January 16, 2007

Corruption imposes substantial economic costs, yet there is little evidence on the success of anti-corruption campaigns. The author studied the 1992 impeachment of president Collor in Brazil to evaluate its impact on politically connected companies both in the short- and long-term. Using an event study methodology, the short-run effect is established: family-connected firms on average lose 2 to 9 percentage points of their value on dates when information damaging to the impeached president is released. However, this decline is reversed entirely within one year. The author concludes that the impeachment had limited success in reducing corruption in Brazil.

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