Real Effects of Private Country-by-Country Disclosure

71 Pages Posted: 14 Jun 2019

See all articles by Lisa De Simone

Lisa De Simone

Stanford Graduate School of Business

Marcel Olbert

University of Mannheim - Business School

Date Written: June 3, 2019


We investigate the effects of mandatory private Country-by-Country (CbC) disclosure to tax authorities on corporate transparency and economic activity. Using rich data on the operations of multinational firms, we exploit the threshold-based application of this 2016 disclosure rule in a regression discontinuity design. We find strong evidence that firms affected by the disclosure mandate reduce ownership in tax haven subsidiaries and thereby increase transparency in their previously opaque organizational structure. We also document, on average, that affected firms invest less in aggregate employment. However, affected firms increasingly allocate revenue, employment, and total assets to subsidiaries in European low-tax countries. We observe increased subsidiary-level revenue and employment only for subsidiaries located in European countries with relatively low tax rates, if the firm has tax haven operations, if the firms is diversified, and if the firm is public. In contrast, mandatory CbC disclosure seems to have little effect on consolidated tax payments. Collectively, our findings suggest that mandatory CbC disclosure helps increase corporate transparency and plausibly curbs the most aggressive tax planning achieved through tax haven operations. However, CbC disclosure has unintended adverse effects on employment as a whole and on the tax-motivated shifting of real economic activity.

Keywords: Real Effects, Disclosure Regulation, Private Disclosure, Mandatory Disclosure, Country-by-Country Reporting, Tax Transparency, Tax Avoidance

JEL Classification: H20, H25, H26, H32, K22, L51, M41, M48, O47

Suggested Citation

De Simone, Lisa and Olbert, Marcel, Real Effects of Private Country-by-Country Disclosure (June 3, 2019). Available at SSRN: or

Lisa De Simone

Stanford Graduate School of Business ( email )

655 Knight Way
Stanford, CA 94305-5015
United States
650-723-3874 (Phone)
650-724-3083 (Fax)


Marcel Olbert (Contact Author)

University of Mannheim - Business School ( email )

Schloss Ostflügel
Mannheim, 68131

Register to save articles to
your library


Paper statistics

Abstract Views
PlumX Metrics