The Value of Offshore secrets: Evidence from the Panama Papers

Finance

Speaker:Hannes Wagner, Bocconi
Date: Tuesday 15 May 2018
Time: 13:45
Location: Streatham Court D

Further details

Abstract

We use the data leak of the Panama Papers on April 3, 2016 to study whether and how the use of offshore shelters affects firm value. We find that the leak erases $135 billion in market capitalization among 397 public firms that we trace as users of offshore vehicles exposed in the leak. These firms use offshore vehicles to finance corruption and aggressively avoid taxes, which increases firm value, but also to expropriate shareholders. Firms implicated by the leak consequently show lower sales from perceptively corrupt regions and lower tax aggressiveness. On net, offshore sheltering enhances firm value by promoting potentially illegal activities that go beyond tax avoidance. Offshore service providers facilitate such activities.

Link to paper: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2771095