Tax avoidance and financial crimes in the Netherlands: The effect of the FinCEN leak on banks

Joseph Mc Cahery; Paul Pudschedl

Tax avoidance and financial crimes in the Netherlands: The effect of the FinCEN leak on banks

Research output: Working paper › Discussion paper › Scientific › peer-review

Abstract

Financial crimes have been an increasing concern to regulators but arguably a greater concern to shareholders of banks. We exploit a media leak of suspicious activity reports (SARs), as part of the FinCEN files, to examine the market value of banks. We find that the market reacted negatively to Dutch financial institutions with exposure to the leak. Moreover, we find significant abnormal returns within the time span between September 19 to September 22. Over the longer horizon, we document that the leak had little impact on shareholder value. Our findings support the view that the stock market drop following the FinCEN leak is largely due to regulatory penalties for past activities or potential litigation risk.

Original language	English
Publisher	VIRTUE Project--Manchester Metropolitan University
Number of pages	25
Publication status	Accepted/In press - 22 Jun 2022

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

SDG 10 Reduced Inequalities
SDG 17 Partnerships for the Goals

Keywords

VAT, Government Policy and Regulation, FinCEN Files, Money Laundering

Connecting Organizations
Bekker, S. (Researcher), Bomer, A. (Researcher), Borghouts, I. (Researcher), De Pietro, C. (Researcher), Dusarduijn, S. (Researcher), Elsweier, F. (Researcher), Essers, P. (Researcher), Garcia Anton, R. (Researcher), Gribnau, H. (Researcher), Gubbels, N. (Researcher), Hoogeveen, M. (Researcher), Houwerzijl, M. (Researcher), Kaufmann, W. (Researcher), Kemmeren, E. (Researcher), Lafarre, A. (Principal Investigator), Lejour, A. (Researcher), Li, J. (Researcher), Loth, M. (Researcher), Mc Cahery, J. (Researcher), Montebovi, S. (Researcher), Peters, C. (Researcher), Rombouts, B. (Researcher), Russo, R. (Researcher), Staats, G. (Researcher), Starink, B. (Researcher), Steegmans, M. (Researcher), Stevens, S. (Researcher), Stevens, T. (Researcher), Sumner, I. (Researcher), Tjong Tjin Tai, E. (Researcher), Tzankova, I. (Researcher), Verbruggen, P. (Researcher), Vermeulen, E. (Researcher), Westerhout, E. (Researcher), Weterings, W. (Researcher), Wibier, R. (Researcher), Xu, D. (Researcher), Zegveld, C. (Researcher), Zekić, N. (Researcher), van Gulijk, S. (Researcher), van Hout, D. (Researcher), van Hulten, M. (Researcher), van Kempen, T. (Researcher), van Kesteren, H. (Researcher), van Vijfeijken, I. (Researcher), Van der Elst, C. (Researcher), Van der Sangen, G. (Researcher), Öner, C. (Researcher), Kryla-Cudna, K. (Researcher), Mak, V. (Researcher), Smit, D. (Researcher), Op Heij, D. (Researcher), Onţanu, E. A. (Researcher), Salah, O. (Researcher), Wijntjens, L. (Researcher), van Norden, G.-J. (Researcher), Vereijken-van den Bosch, S. (Researcher), Fernandez de Aranguiz Chueca, A. (Researcher), Diamant, Y. (Researcher), Geiregat, S. (Researcher), van der Burgt, B. (Researcher), Hofman, A. (Researcher) & Groeneveld-Tijssens, N. (Researcher)
1/01/19 → 31/12/23
Project: Research project

Cite this

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abstract = "Financial crimes have been an increasing concern to regulators but arguably a greater concern to shareholders of banks. We exploit a media leak of suspicious activity reports (SARs), as part of the FinCEN files, to examine the market value of banks. We find that the market reacted negatively to Dutch financial institutions with exposure to the leak. Moreover, we find significant abnormal returns within the time span between September 19 to September 22. Over the longer horizon, we document that the leak had little impact on shareholder value. Our findings support the view that the stock market drop following the FinCEN leak is largely due to regulatory penalties for past activities or potential litigation risk. ",

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N2 - Financial crimes have been an increasing concern to regulators but arguably a greater concern to shareholders of banks. We exploit a media leak of suspicious activity reports (SARs), as part of the FinCEN files, to examine the market value of banks. We find that the market reacted negatively to Dutch financial institutions with exposure to the leak. Moreover, we find significant abnormal returns within the time span between September 19 to September 22. Over the longer horizon, we document that the leak had little impact on shareholder value. Our findings support the view that the stock market drop following the FinCEN leak is largely due to regulatory penalties for past activities or potential litigation risk.

AB - Financial crimes have been an increasing concern to regulators but arguably a greater concern to shareholders of banks. We exploit a media leak of suspicious activity reports (SARs), as part of the FinCEN files, to examine the market value of banks. We find that the market reacted negatively to Dutch financial institutions with exposure to the leak. Moreover, we find significant abnormal returns within the time span between September 19 to September 22. Over the longer horizon, we document that the leak had little impact on shareholder value. Our findings support the view that the stock market drop following the FinCEN leak is largely due to regulatory penalties for past activities or potential litigation risk.

KW - VAT, Government Policy and Regulation, FinCEN Files, Money Laundering

M3 - Discussion paper

BT - Tax avoidance and financial crimes in the Netherlands

PB - VIRTUE Project--Manchester Metropolitan University

ER -

Tax avoidance and financial crimes in the Netherlands: The effect of the FinCEN leak on banks

Abstract

UN SDGs

Keywords

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Cite this