Transparency and Actual vs Reported Performance: Evidence from Moscow Administrative Data

We investigate the relation between firm level changes in transparency and changes in firm performance utilizing a unique employer-employee matched dataset from Russia. Transparency is measured by comparing reported earnings to the market values of cars of employees of a given company. We find that increased transparency is associated with increases in reported earnings; at the same time actual take-home pay declines. We also find that top managers in large companies lose less from increases in transparency than rank-and-file employees. Finally, we find that companies experiencing transparency increases have trouble retaining existing and attracting new human capital