Firms are facing progressively more stringent tax disclosure requirements. In this paper, we examine whether increased qualitative tax transparency leads to intended outcomes using, as an exogenous shock, the 2016 UK reform that mandated the disclosure of a tax strategy for arms above a certain size threshold. We and that arms that have to publish a separate tax strategy report significantly increase their voluntary tax disclosure in the annual reports, but we show no widespread effect on tax avoidance, measured by changes in effective tax rates. We document two mechanisms through which mandating a tax strategy report affects overall tax disclosure. First, we and large changes in disclosure for arms facing high public scrutiny. Second, arms with higher quality of tax strategy reports increase the qualitative discussion of their tax affairs in their annual reports by larger amounts, while arms with lower quality reports show increases in tax avoidance. Our results demonstrate the diffculty of generating a standard that effectively incentivizes desirable behavior when the disclosure mandate is asking for purely qualitative information.


Bilicka, Katarzyna
Casi-Eberhard, Elisa
Seregni, Carol
Stage, Barbara


Tax Transparency, Tax Aggressiveness, Profit Shifting, Regulatory Requirements