Real Effects of Private Country-by-Country Disclosure

57 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: October 30, 2019


We investigate the effects of mandatory private Country-by-Country (CbC) disclosure to European tax authorities on 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 evidence consistent with firms affected by the disclosure mandate reducing ownership in tax haven subsidiaries relative to unaffected firms and thereby increasing transparency in their previously opaque organizational structure. We also observe that affected firms increasingly allocate revenue, employment, total assets, and, correspondingly, tax payments to subsidiaries in low-tax European countries. Additional tests at the consolidated firm-level and at the subsidiary-level support the conclusion that firms shift real activities away from operations outside Europe – including from tax havens – to Europe, particularly to non-haven European countries with low corporate income tax rates. Collectively, our findings suggest that mandatory CbC disclosure curbs the most aggressive tax planning achieved through tax haven operations but also affects the allocation of multinationals’ real economic activities.

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

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 (October 30, 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

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