Anti-corruption Audits and Citizens’ Trust in Audit and Auditee Institutions

Abstract

Abstract Anticorruption audits may deter corruption and signal to citizens that institutions are proactively combating it. However, by detecting and reporting corruption, audits might also unintentionally erode trust in institutions. Therefore, the impact of audits potentially hinges on whether they uncover corruption. Audit institutions, not implicated in the corruption they uncover, might be less likely to experience a decline in trust compared to auditee institutions. This study uses survey and administrative data from Brazil, leveraging a federal anti-corruption program that randomly selects municipalities for auditing. Results do not support the claim that audits boost institutional trust. Individuals in audited municipalities show no different levels of trust in local government or the audit institution than those in non-audited municipalities, and the coefficients may even indicate a negative effect. Additionally, audit institutions may not be better insulated from the corrosive effects of uncovering corruption than the institutions they audit.