Local governance quality and law compliance: The case of Mozambican firms

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Using panel data of manufacturing enterprises in Mozambique between 2012 and 2017, we investigate how changes in perceived quality of governance are related to firms' law compliance. Controlling for firm-level unobserved heterogeneity, we look at three aspects of governance and their components: transparency, security, and infrastructure. We examine which of these have the potential to alter firm compliance behaviour. We find that enterprises' perceptions of transparency are key to law abidance.

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