Seminario di Diego Ravenda

ore 12.30 Sala Seminari – I° piano, Palazzo Levi Cases, Via del Santo 33

07.12.2016

Seminario di Diego Ravenda, Toulouse Business School

Transaction Management as an Evidence of Mafia Money Laundering

This study aims to determinate whether accounting can provide evidence of money laundering activities in particular socio-economic and political contexts. Specifically, we examine transaction management (TRM) within a sample of 224 firms defined as legally registered Mafia firms (LMFs), due to their owners being accused of affiliation with an Italian Mafia organization. For this purpose, we adopt some TRM proxies whose patterns may provide empirical evidence of underlying illicit and/or opportunistic practices within LMFs. Our results reveal that defore confiscation LMFs exhibit abnormally high raw material and merchandise costs and abnormally low personnel and service costs with a cumulative negative effect on cash flow relative to sales as an evidence of TRM linked to specific money laundering practices. In contrast, following the confiscation and intervention of legal administrators, personnel and service costs return to normal, whereas abnormally high raw material and merchandise costs significantly decrease relative to before confiscation. An additional analysis indicates that LMFs can be grouped in three clusters based on their characteristics and different involvement in money laundering. This study develops new TRM proxies based on the nature of the expenditure transaction which may help practitioners and regulators to enhance the performance of risk assessment models in detecting criminal infiltrations and money laundering practices. Furthermore, this study shows that unlisted firms such as LMFs may engage in TRM for illicit and/or opportunistic purposes, when their financial statements are irrelevant for trading with stakeholders because of specific competitive advantages or dominant market position.