Using two novel datasets and a more comprehensive sample, we document a new stylized fact: tax havens play a major role in mergers and acquisitions (M&A). Cross-border M&A involving either an acquiror or a target from a haven accounts for 29.7% of cross-border M&A volume, or 11.1% of all M&A activity. We investigate 20,360 such transactions from 1990 to 2023, valued at $8.3 trillion. $4.6 of the $8.3 trillion is classified as “abnormal” activity based on a gravity model with economic fundamentals. Small havens alone account for $2.4 trillion, or 8.5% of cross-border M&A volume (e.g., Bermuda, the Cayman Islands).

We study whether increases in the cost of tax avoidance affect corporate investment.

Tax avoidance can raise investment not only by lowering effective tax rates, but also by

preserving internal funds that firms can use when external finance is costly. Identifying

this channel is difficult because tax reforms typically change both statutory tax rates

and incentives to avoid taxes. We exploit offshore data leaks as firm-specific shocks to

the cost of avoidance that do not change statutory tax rates. We link the ICIJ Offshore

Leaks Database to Orbis Europe and identify exposed private firms across 12 European

countries. Using a staggered difference-in-differences design, we find that exposed firms

reduce investment after the leaks. The decline is concentrated among firms for which

internal funds are likely to have high shadow value: smaller firms, younger firms, firms

without prior long-term debt relationships, and lower-productivity firms. Exposed

firms also experience deteriorating operating cash flows and pre-tax profits. We find no

evidence that the effects are driven by product-market penalties or credit supply shocks.

The evidence shows that increases in avoidance costs can reduce real investment by

tightening firms’ internal financing capacity, even when statutory tax rates and credit

conditions do not change.

We conduct a survey experiment presenting identical venture capital fund profiles to professional and individual investors. The two groups evaluate funds very differently. Professional investors weight track records heavily and avoid first-time funds. Individual investors ignore past performance, focusing instead on educational credentials and location. Using a risk-averse benchmark model calibrated to historical VC returns, we show that professional investors' preferences align with past VC performance while individual investors' selections deviate substantially. A follow-up experiment isolates two mechanisms: informing individuals that VC performance persists increases their track record sensitivity by 12.5 percentage points, and assuring equal access to top-performing funds increases sensitivity by 9.9 percentage points. Both channels operate independently, with information appearing somewhat more important. These selection differences have meaningful consequences. We estimate that selection alone could reduce individual investor returns by approximately 12\%, accounting for roughly 20\% of the performance gap with professionals. Observational data confirm that funds with more individual investors have worse exit outcomes and weaker performance persistence. These results indicate that selection, not just access, would likely shape individual investor outcomes in private markets.