Disclosure of Beneficial Ownership after the Panama Papers
Publication of the so-called “Panama Papers” focused public interest on how certain politicians, celebrities, and other elites may have used elaborate corporate structures and offshore tax havens to conceal their beneficial ownership of companies a...
| Main Authors: | , |
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| Format: | Working Paper |
| Language: | English en_US |
| Published: |
International Finance Corporation, Washington, DC
2016
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/133851477569419510/Focus-14-Disclosure-of-beneficial-ownership-after-the-Panama-Papers http://hdl.handle.net/10986/25408 |
| Summary: | Publication of the so-called “Panama
Papers” focused public interest on how certain politicians,
celebrities, and other elites may have used elaborate
corporate structures and offshore tax havens to conceal
their beneficial ownership of companies and obscure their
personal assets. Rather than taking the Panama Papers as an
indication of the need for more and stricter disclosure and
reporting rules, this paper advocates an alternative
approach. We need to start by acknowledging that many
companies are currently experiencing "disclosure and
reporting fatigue", in which the constant demand for
“more” and “better” transparency and reporting is having the
unintended effect of promoting indifference or evasiveness.
The practice of disclosure and reporting is widely perceived
as an obligation to be fulfilled and not as an opportunity
to add value to a firm. This is confirmed by the findings of
an empirical study conducted by the authors of this paper
that examines how disclosure rules operate in practice
across various jurisdictions. The key takeaway of the study
is that—even in jurisdictions that have a robust disclosure
regime—the majority of firms engage in “grudging” or
“boilerplate” compliance, in which ownership and control
structures are not adequately revealed in an accessible way
and, perhaps more importantly, the impact of these ownership
and control structures on the governance of a company is
obscured. In this paper the authors advocate an approach
based on the current communication strategy of a minority of
firms in their sample—firms that engage in what the authors
characterize as “open communication.” These firms present
information on control structures—and their effect on
governance—in a direct, accessible, and highly personalized
manner. Such firms seem to recognize the commercial and
other strategic benefits to be gained from open
communication. The paper explores the implications of such
an approach for both business and regulators. |
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