We found a match
Your institution may have access to this item. Find your institution then sign in to continue.
- Title
Real Effects of Private Country-by-Country Disclosure.
- Authors
De Simone, Lisa; Olbert, Marcel
- Abstract
We investigate the effects of mandatory private Country-by-Country Reporting (CbCR) to European tax authorities on multinational firms' capital and labor investments, as well as their organizational structures. We exploit the threshold-based application of this 2016 disclosure rule to conduct difference-in-differences and regression discontinuity tests. We document increases in capital and labor expenditures in Europe, but these effects are more pronounced in countries with preferential tax regimes. Cross-sectional tests and analysis using consolidated financial data provide evidence consistent with multinational firms reallocating capital across Europe to mitigate increased tax enforcement risk, as well as with CbCR hindering capital investment efficiency. We also find evidence consistent with firms responding to CbCR by reducing organizational complexity. Collectively, our results support the conclusion that mandatory private CbCR causes firms to change real investment activities to substantiate their tax avoidance activities in Europe while reducing the appearance of aggressive tax practices. JEL Classifications: H20; H25; H26; H32; K22; L51; M41; M48; O47.
- Subjects
ACCOUNTING; DISCLOSURE laws; TAX evasion; TAX havens; FISCAL policy
- Publication
Accounting Review, 2022, Vol 97, Issue 6, p201
- ISSN
0001-4826
- Publication type
Article
- DOI
10.2308/TAR-2020-0714