Redrawing the Map of Global Capital Flows: The Role of Cross-Border Financing and Tax Havens

By Antonio Coppola, Matteo Maggiori, Brent Neiman, Jesse Schreger. Quarterly Journal of Economics, 2020

205 citations recorded by the source corpus.

Global firms finance themselves through foreign subsidiaries, often shell companies in tax havens, which obscures their true economic location in official statistics. We associate the universe of traded securities issued by firms in tax havens with their issuer's ultimate parent and restate bilateral investment positions to better reflect the financial linkages connecting countries around the world. Bilateral portfolio investment from developed countries to firms in large emerging markets is dramatically larger than previously thought. The national accounts of the United States, for example, understate the U.S. position in Chinese firms by nearly $600 billion. Further, we demonstrate how offshore issuance in tax havens affects our understanding of the currency composition of external portfolio liabilities and the nature of foreign direct investment. Finally, we provide additional restatements of bilateral investment positions, including one based on the geographic distribution of sales.

Subfields: Accounting, Finance

View Paper: https://www.semanticscholar.org/paper/d226b295be06f90c26b3aebdbb17160d5eb439a7

Citations in the corpus

• International Currencies and Capital Allocation (2020, unknown): “We use the procedure described in Coppola et al. (2019) and unwind issuance in tax havens and opaque international ownership structures in order to attribute securities to their ultimate parent firm (and its industry and country of operation), the revenues of which are used to repay the debt.”