Panama Papers: Firms lost billions after leak

ANN ARBOR—The Panama Papers leak exposed millions of confidential documents from the Panamanian law firm Mossack Fonseca, making offshore transactions very public.

New research by Stefan Zeume, assistant professor of finance at the University of Michigan’s Ross School of Business, shows the stock market valued some of these offshore activities.

Zeume and colleagues found that the 1,105 publicly traded firms with subsidiaries in the tax havens used by Mossack Fonseca lost a collective $222 billion to $230 billion of market capitalization—about $200 million per firm—after the leak was published in the media.

They also found similar drops in value for companies operating in countries perceived to be corrupt. The largest drops in value were seen with companies that had subsidiaries in Mossack Fonseca tax havens and in countries with politicians implicated by the leaked documents, such as Iceland.

“The findings together tell us that the market thought that firms created value by using tax

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