Real Effects of Private Country-by-Country Disclosure

• 成果类型: Article
• 署名作者: De Simone, Lisa; Olbert, Marcel
• 署名单位: University of Texas System; University of Texas Austin; University of London; London Business School
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/TAR-2020-0714
• 发表日期: 2022
• 页码: 201-232
• 关键词: regression discontinuity designs; tax havens; INVESTMENT; INFORMATION; multinationals; TRANSPARENCY

摘要

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.