Using a sample of 17,880 firms from 24 countries included in the 2009 World Bank
Enterprise Survey, we find that the likelihood of granting a gift to secure a government
contract is lower in case the financial statements are reviewed by an external audit firm.
We also document that granting gifts to secure government contract is less likely to
occur in countries where audit firms face a higher litigation risk and in countries having
more extensive financial reporting requirements. These findings support certain policies
that currently being implemented or discussed to mitigate corruption.