Does the mafia hire good accountants?

We investigate if organized crime groups (OCG) in Italy - like the Mafia, ‘Ndrangheta, and Camorra - are able to hire good accountants. Unique data about criminal records are used to identify Italian accountants with OCG connections. While the work accountants do for OCG is not observable, we can determine if OCG hire “good” accountants by assessing the overall quality of their work as external monitors for other (non-OCG) clients. We find that non-OCG firms serviced by accountants with OCG connections have higher quality audited financial statements compared to a control group of firms having accountants with no OCG connections. The findings provide evidence OCG are able to hire good accountants, despite the downside risk of OCG associations. Results are robust to controls for self-selection, for other determinants of auditor expertise, connections of directors and shareholders to OCG, and corporate governance mechanisms that might influence auditor choice and audit quality.