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Expropriations, property confiscations and new offshore entities: Evidence from the Panama Papers

Ralph-C Bayer (), Roland Hodler, Paul Raschky () and Anthony Strittmatter ()

Journal of Economic Behavior & Organization, 2020, vol. 171, issue C, 132-152

Abstract: We study a motive for why individuals may hide wealth in offshore entities that has received scant attention in the academic literature and the public debate: the fear of expropriation. We use the Panama Papers and data on media reporting on expropriations and property confiscations. We document that such news reports increase the probability that offshore entities are incorporated by agents from the same country in the same month. This result is robust to the use of country-year- and month-fixed effects and the exclusion of tax havens. The effect is stronger in countries with well-functioning governments. We argue that individuals start hiding their proceeds from illegal activities in offshore entities when reasonably well-intended and well-functioning governments become more serious about law enforcement.

Keywords: Expropriations and confiscations; Offshore entities; Tax havens; Panama Papers (search for similar items in EconPapers)
JEL-codes: H26 K42 (search for similar items in EconPapers)
Date: 2020
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Related works:
Working Paper: Expropriations, Property Confiscations and New Offshore Entities: Evidence from the Panama Papers (2018) Downloads
Working Paper: Expropriations, Property Confiscations and New Offshore Entities: Evidence from the Panama Papers (2018) Downloads
Working Paper: Expropriations, Property Confiscations and New Offshore Entities: Evidence from the Panama Papers (2018) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:171:y:2020:i:c:p:132-152

DOI: 10.1016/j.jebo.2020.01.002

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Journal of Economic Behavior & Organization is currently edited by Houser, D. and Puzzello, D.

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