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.
Disclosure statement
This work was supported by a Research Grant of Pukyong National University (2017).
Notes
3 The KCGS evaluates the relative dividend payout ratio of the company, compared to the benchmark firms of similar profitability, growth and variability.