Tax haven investors, firm value and investor protection

Soonho Kim, Hosung Jung and Haejung Na

Applied Economics Letters, 2019, vol. 26, issue 19, 1634-1640

Abstract: Tax haven investors’ large shareholding may lead to more lenient surveillance of the target company, which is expected to have a negative effect on firm value by deteriorating agency problems for companies with relatively poorer investor protection. By crawling data from online filings and constructing a unique dataset of tax haven investors’ shareholding, we find that disclosures of large shareholding by tax haven investors lead to a significantly larger decreases in firm value than those by non-tax haven investors. Moreover, the decrease in value is related to market participants’ concerns about agency problems when tax haven investors increase their shareholding. We suggest that financial supervisory authorities recognize and reflect these findings in their foreign investment promotion and monitoring policies.

Date: 2019
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DOI: 10.1080/13504851.2019.1591584

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