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The power of financial transparency: An event study of country-by-country reporting standards

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  • Johannesen, Niels
  • Larsen, Dan Thor

Abstract

We show that recent European legislation requiring oil, gas and mining companies to disclose their tax payments on a country-by-country basis was associated with significant decreases in firm value. This suggests that tax evasion creates considerable rents for firms in extractive industries and that disclosure rules have the potential to reduce these rents.

Suggested Citation

  • Johannesen, Niels & Larsen, Dan Thor, 2016. "The power of financial transparency: An event study of country-by-country reporting standards," Economics Letters, Elsevier, vol. 145(C), pages 120-122.
    • Handle: RePEc:eee:ecolet:v:145:y:2016:i:c:p:120-122
    DOI: 10.1016/j.econlet.2016.05.029
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    References listed on IDEAS

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    1. Huizinga, Harry & Laeven, Luc & Nicodeme, Gaetan, 2008. "Capital structure and international debt shifting," Journal of Financial Economics, Elsevier, vol. 88(1), pages 80-118, April.
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    4. Niels Johannesen & Gabriel Zucman, 2014. "The End of Bank Secrecy? An Evaluation of the G20 Tax Haven Crackdown," American Economic Journal: Economic Policy, American Economic Association, vol. 6(1), pages 65-91, February.
    5. Gabriel Zucman, 2014. "Taxing across Borders: Tracking Personal Wealth and Corporate Profits," Journal of Economic Perspectives, American Economic Association, vol. 28(4), pages 121-148, Fall.
    6. Fuest, Clemens & Hebous, Shafik & Riedel, Nadine, 2011. "International debt shifting and multinational firms in developing economies," Economics Letters, Elsevier, vol. 113(2), pages 135-138.
    7. Dischinger, Matthias & Riedel, Nadine, 2011. "Corporate taxes and the location of intangible assets within multinational firms," Journal of Public Economics, Elsevier, vol. 95(7), pages 691-707.
    8. Johannesen, Niels, 2014. "Tax avoidance with cross-border hybrid instruments," Journal of Public Economics, Elsevier, vol. 112(C), pages 40-52.
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    More about this item

    Keywords

    Tax evasion; Profit shifting; Multinational firms; Country-by-country reporting; Developing countries; Financial transparency;
    All these keywords.

    JEL classification:

    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance

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