Compliance is taxing: a field experiment on tax abatement information in the United States

In this paper, we examine a major transparency initiative affecting tax abatements for state and local economic development in the United States that has been plagued by noncompliance. Unlike academic studies examining government compliance with transparency rules such as Freedom of Information Act (FOIA) requests, we examine government and independent auditor responses to inquiries about information already posted, or not posted, in annual financial reports. Using a pre-registered experimental approach on cities, counties, and school districts in a single large-population state (Texas), we remind entities and their external auditors of their transparency obligations as well as our ability to check their compliance with this transparency rule and ask these entities follow-up questions about their required posts. Against expectations, we found that entities were not significantly more likely to comply with our request for information when we reminded them of their disclosure obligations and we found some evidence that nudges made entities less likely to comply. We argue these results provide novel insights into the limitations of transparency initiatives.