(The) effect of anti-corruption law on entrepreneurial activity

Abstract

This study examines the impact of anti-corruption law on new firm creations. We use anti-corruption laws established by Russian regional governments in different years from 2006 to 2014 as a natural experiment. Using a fixed effects methodology we test the effect of the law on all firm creations, firm creations by gender of a founder, and innovative firm (were awarded at least one patent) creations in regions of Russia. We observe 52 Russian regions monthly for two years before and two years after establishment of the law. We find that the total number of firm creations and firms with male founders are positively affected by anti-corruption law. Moreover, results show that creations of firms founded by female were not affected by the law. This is consistent with the view that females are less engaged in corruption and, therefore, corruption levels do not affect their business. Additionally, the number of innovative firm creations during two years before and two years after establishment of the law had not experienced a significant change.