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The Deterrence Effect of Whistleblowing: An Event Study of Leaked Customer Information from Banks in Tax Havens

Author

Listed:
  • Niels Johannesen
  • Tim Stolper

Abstract

We document that the first leak of customer information from a tax haven bank caused a sudden flight of deposits from tax havens and a sharp decrease in the market value of banks known to be assisting with tax evasion. The loss of market value was largest for the banks most strongly involved in tax evasion and zero for banks with no known ties to tax evasion. Subsequent leaks had qualitatively similar although smaller effects. Our findings suggest that whistleblowing in tax haven banks deters offshore tax evaders by increasing the perceived risk of committing and assisting with tax evasion.

Suggested Citation

  • Niels Johannesen & Tim Stolper, 2017. "The Deterrence Effect of Whistleblowing: An Event Study of Leaked Customer Information from Banks in Tax Havens," CESifo Working Paper Series 6784, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_6784
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    File URL: http://www.cesifo-group.de/DocDL/cesifo1_wp6784.pdf
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    References listed on IDEAS

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    1. Gary S. Becker, 1974. "Crime and Punishment: An Economic Approach," NBER Chapters,in: Essays in the Economics of Crime and Punishment, pages 1-54 National Bureau of Economic Research, Inc.
    2. Niels Johannesen & Gabriel Zucman, 2014. "The End of Bank Secrecy? An Evaluation of the G20 Tax Haven Crackdown," American Economic Journal: Economic Policy, American Economic Association, vol. 6(1), pages 65-91, February.
    3. Johannesen, Niels, 2014. "Tax evasion and Swiss bank deposits," Journal of Public Economics, Elsevier, vol. 111(C), pages 46-62.
    4. repec:oup:jeurec:v:15:y:2017:i:4:p:818-860. is not listed on IDEAS
    5. Langenmayr, Dominika, 2017. "Voluntary disclosure of evaded taxes — Increasing revenue, or increasing incentives to evade?," Journal of Public Economics, Elsevier, vol. 151(C), pages 110-125.
    6. Salinger, Michael, 1992. "Standard Errors in Event Studies," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 27(01), pages 39-53, March.
    7. Annette Alstadsæter & Niels Johannesen & Gabriel Zucman, 2017. "Who Owns the Wealth in Tax Havens? Macro Evidence and Implications for Global Inequality," NBER Working Papers 23805, National Bureau of Economic Research, Inc.
    8. Zhi Da & Joseph Engelberg & Pengjie Gao, 2011. "In Search of Attention," Journal of Finance, American Finance Association, vol. 66(5), pages 1461-1499, October.
    9. Gabriel Zucman, 2013. "The Missing Wealth of Nations: Are Europe and the U.S. net Debtors or net Creditors?," The Quarterly Journal of Economics, Oxford University Press, vol. 128(3), pages 1321-1364.
    10. Jørgen Juel Andersen & Niels Johannesen & David Dreyer Lassen & Elena Paltseva, 2013. "Petro Rents, Political Institutions, and Hidden Wealth: Evidence from Bank Deposits in Tax Havens," EPRU Working Paper Series 2013-03, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
    11. Annette Alstadsæter & Niels Johannesen & Gabriel Zucman, 2017. "Tax Evasion and Inequality," NBER Working Papers 23772, National Bureau of Economic Research, Inc.
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    13. Kahan, Dan M & Posner, Eric A, 1999. "Shaming White-Collar Criminals: A Proposal for Reform of the Federal Sentencing Guidelines," Journal of Law and Economics, University of Chicago Press, vol. 42(1), pages 365-391, April.
    14. Eddie Dekel & Barton L. Lipman & Aldo Rustichini, 1998. "Standard State-Space Models Preclude Unawareness," Econometrica, Econometric Society, vol. 66(1), pages 159-174, January.
    15. Hanlon, Michelle & Slemrod, Joel, 2009. "What does tax aggressiveness signal? Evidence from stock price reactions to news about tax shelter involvement," Journal of Public Economics, Elsevier, vol. 93(1-2), pages 126-141, February.
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    Cited by:

    1. Annette Alstadsæter & Niels Johannesen & Gabriel Zucman, 2017. "Tax Evasion and Inequality," NBER Working Papers 23772, National Bureau of Economic Research, Inc.

    More about this item

    Keywords

    whistleblowing; economic crime; tax evasion; tax havens;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law

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