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The Deterrence Effect of Whistleblowing – An Event Study of Leaked Customer Information from Banks in Tax Havens

Niels Johannesen and Tim B.M. Stolper

No tax-mpg-rps-2017-04_2, Working Papers from Max Planck Institute for Tax Law and Public Finance

Abstract: We document that the first leak of customer information from a tax haven bank caused a sudden flight of deposits from tax havens and a sharp decrease in the market value of banks known to be assisting with tax evasion. The loss of market value was largest for the banks most strongly involved in tax evasion and zero for banks with no known ties to tax evasion. Subsequent leaks had qualitatively similar although smaller e¤ects. Our findings suggest that whistleblowing in tax haven banks deters o¤shore tax evaders by increasing the perceived risk of committing and assisting with tax evasion.

Keywords: whistleblowing; economic crime; tax evasion; tax havens (search for similar items in EconPapers)
JEL-codes: G21 H26 K42 (search for similar items in EconPapers)
Pages: 56 pages
Date: 2017-04
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