The Value of Offshore Secrets – Evidence from the Panama Papers

61 Pages Posted: 28 Apr 2016 Last revised: 21 Oct 2018

See all articles by James O'Donovan

James O'Donovan

INSEAD

Hannes F. Wagner

Bocconi University - Department of Finance; Bocconi University - IGIER - Innocenzo Gasparini Institute for Economic Research

Stefan Zeume

University of Michigan, Stephen M. Ross School of Business

Date Written: October 19, 2018

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.

Keywords: Panama Papers, tax haven, offshore, corruption, tax evasion, expropriation, corporate misbehavior, Paradise Papers

JEL Classification: G32, G38, H25, H26

Suggested Citation

O'Donovan, James and Wagner, Hannes F. and Zeume, Stefan, The Value of Offshore Secrets – Evidence from the Panama Papers (October 19, 2018). Available at SSRN: https://ssrn.com/abstract=2771095 or http://dx.doi.org/10.2139/ssrn.2771095

James O'Donovan

INSEAD ( email )

1 Ayer Rajah Avenue
138676 Singapore, 138676
Singapore

Hannes F. Wagner (Contact Author)

Bocconi University - Department of Finance ( email )

Via Roentgen 1
Milano, MI 20136
Italy

HOME PAGE: http://faculty.unibocconi.eu/hanneswagner

Bocconi University - IGIER - Innocenzo Gasparini Institute for Economic Research ( email )

Via Roentgen 1
Milan, 20136
Italy

Stefan Zeume

University of Michigan, Stephen M. Ross School of Business ( email )

701 Tappan Street
Ann Arbor, MI MI 48109
United States

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