Preventing Predation: Oligarchs, Obfuscation, and Political Connections
60 Pages Posted: 11 Dec 2019 Last revised: 13 Dec 2019
Date Written: December 8, 2019
We examine the decision of wealthy business owners to protect their holdings from expropriation and arbitrary taxation through proxies, shell companies, and offshore firms. Our theoretical framework emphasizes the role of political connections in decisions to obfuscate. Linking information from investigative journalists on Ukrainian oligarchs with firm-level administrative data on formal ownership ties, we observe obfuscation among more than two-thirds of oligarch-controlled firms, but such behavior is much less common for connected oligarchs. Further exploiting the abrupt shock to political connections that accompanied the Orange Revolution, we find a sharp rise in obfuscation among previously connected oligarchs.
Keywords: property rights, predation, oligarchs, ownership chains, political connections
JEL Classification: D23, G32, P26
Suggested Citation: Suggested Citation