Public Tax Disclosures and Investor Perceptions

49 Pages Posted: 23 Jan 2021 Last revised: 4 May 2021

See all articles by Bart Dierynck

Bart Dierynck

Tilburg University

Martin Jacob

WHU - Otto Beisheim School of Management

Maximilian A. Müller

ESMT Berlin

Christian Peters

Tilburg University

Victor van Pelt

WHU - Otto Beisheim School of Management

Date Written: May 1, 2021

Abstract

To reveal to the public whether firms pay their fair share of taxes, regulators increasingly mandate public tax disclosures. One assumption is that these disclosures help stakeholders, such as retail investors, identify aggressive tax avoiders. However, we find that retail investors become worse at identifying firms using aggressive avoidance methods when they receive designated tax disclosures alongside standard effective tax rate reconciliations. This experimental finding is consistent with our prediction rooted in attribute substitution theory that retail investors fixate on designated tax disclosures when forming perceptions about whether firms pay their fair share and their willingness to invest.

Keywords: public tax disclosure, corporate taxation, attribute substitution, retail investors

JEL Classification: C91, H26, M48

Suggested Citation

Dierynck, Bart and Jacob, Martin and Müller, Maximilian A. and Peters, Christian P. H. and van Pelt, Victor, Public Tax Disclosures and Investor Perceptions (May 1, 2021). Available at SSRN: https://ssrn.com/abstract=3729938 or http://dx.doi.org/10.2139/ssrn.3729938

Bart Dierynck

Tilburg University ( email )

P.O. Box 90153
Tilburg, DC Noord-Brabant 5000 LE
Netherlands

Martin Jacob (Contact Author)

WHU - Otto Beisheim School of Management ( email )

Burgplatz 2
D-56179 Vallendar, 56179
Germany

HOME PAGE: http://www.whu.edu/steuer

Maximilian A. Müller

ESMT Berlin ( email )

Schlossplatz 1
Berlin, 10178
Germany

HOME PAGE: http://faculty-research.esmt.berlin/person/maximilian-muller/bio

Christian P. H. Peters

Tilburg University

P.O. Box 90153
Tilburg, DC 5000 LE
Netherlands

Victor Van Pelt

WHU - Otto Beisheim School of Management ( email )

Burgplatz 2
Vallendar, 56179
Germany

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