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The Value of Offshore Secrets: Evidence from the Panama Papers

Author

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  • James O’Donovan
  • Hannes F. Wagner
  • Stefan Zeume

Abstract

We exploit one of the largest data leaks to date to study whether and how firms use secret offshore vehicles. From the leaked data, we identify 338 listed firms as users of secret offshore vehicles and document that these vehicles are used to finance corruption, avoid taxes, and expropriate shareholders. Overall, the leak erased $174 billion in market capitalization among implicated firms. Following the increased transparency brought about by the leak, implicated firms experience lower sales from perceptively corrupt countries and avoid less tax. We estimate conservatively that one in seven firms have offshore secrets. JEL Classification: G32, G38, H25, H26 Keywords: Panama Papers, tax haven, offshore, corruption, tax evasion, expropriation, corporate misbehavior, Paradise Papers.

Suggested Citation

  • James O’Donovan & Hannes F. Wagner & Stefan Zeume, 2018. "The Value of Offshore Secrets: Evidence from the Panama Papers," Working Papers 634, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
    • Handle: RePEc:igi:igierp:634
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    More about this item

    Keywords

    panama papers; tax haven; offshore; corruption; tax evasion; expropriation; corporate misbehavior; paradise papers.;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance

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