Scandinavian Working Papers in Economics

Discussion Papers,
Norwegian School of Economics, Department of Business and Management Science

No 2026/14: Cum-Fake: Improper Dividend Withholding Tax Reclaims through Pre-Release ADRs

David Murphy, Maximilian Todtenhaupt () and Floris T. Zoutman ()
Additional contact information
David Murphy: Dept. of Business and Management Science, Norwegian School of Economics, Postal: NHH , Department of Business and Management Science, Helleveien 30, N-5045 Bergen, Norway
Maximilian Todtenhaupt: Institute of Public Finance, Leibniz University Hannover, Postal: Leibniz University Hannover, Institute of Public Finance, Königsworther Platz 1, 30167 Hannover, Germany
Floris T. Zoutman: Dept. of Business and Management Science, Norwegian School of Economics, Postal: NHH , Department of Business and Management Science, Helleveien 30, N-5045 Bergen, Norway

Abstract: Cum-fake schemes use pre-release ADRs without underlying shares to create dividend withholding tax (DWT) refund claims. Using daily ADR data for 2008–2019 and a triple differences design, we document lending patterns consistent with these schemes. Before 2014, excess dividend-window ADR lending equaled 0.35% of issuer market value in DWT countries, versus 0.04% for U.K. ADRs, where dividends generally face no DWT. This gap vanished after the SEC intensified scrutiny in 2014. ADR and underlying security prices show no persistent wedge. Calibration suggests a tax revenue loss of $264–640 million.

Keywords: Dividend withholding tax; tax enforcement; securities lending

JEL-codes: F23; G18; H26; K22; M21

Language: English

37 pages, November 2, 2026

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