The Value of Offshore Secrets – Evidence from the Panama Papers
Review of Financial Studies, forthcoming
58 Pages Posted: 28 Apr 2016 Last revised: 22 Mar 2019
Date Written: October 19, 2018
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: Suggested Citation