Legality certification and firm performance: Evidence from Italy’s anti-mafia white list

This paper investigates whether legality certification is associated with improved firm performance in environments exposed to organized crime. We study the Italian White List (WL) program, a public registry certifying firms as free from mafia connections, which substitutes traditional anti-mafia documentation and serves as a publicly verifiable signal of legal reliability. Using comprehensive firm-level data for 2011–2020, we implement a Difference-in-Differences design on a propensity-score common-support sample, with a switch-on and switch-off specification to examine the relationship between WL certification and firm performance. Results show that certification is associated with positive but modest changes in Total Factor Productivity (TFP) during the period of active certification, with no evidence of additional post-certification changes. By contrast, profitability differentials are larger and tend to increase further after certification lapses. The effects are strongest for micro and small enterprises and for firms operating in high-risk sectors such as construction and transport. They also vary by firm age: productivity effects are concentrated among younger firms, while profitability effects are more pronounced among young and mature firms. These patterns are consistent with a role for legality certification in strengthening firms’ credibility and facilitating market interactions in weak-governance environments.