Cautionary Tales: Celebrities, the News Media, and Participation in Tax Amnesties

Abstract

This study uses an original state-level data set to investigate whether press coverage on trials for tax evasion by celebrities affects the likelihood that other tax payers participate in Germany’s tax amnesty program. To identify the causal effect, we use exogenous variation in the reporting, resulting from disasters and terrorist attacks that coincide with the celebrity trials. Instrumental variable estimates suggest that an increase in news coverage by the amount of an average trial raises participation in the tax amnesty program by approximately 22.5%.

Keywords: news coverage, public trial, self-denunciation, tax evasion

JEL Classification: D830, H260, K340, L820