5 questions for Mercator Fellow Harm Schütt
Harm Schütt, Assistant Professor of Accountancy at Tilburg University School of Economics and Management, was a Mercator Fellow at WHU – Otto Beisheim School of Management in Vallendar during Fall, 2020. He contributed to the research of TRR 266 by supporting the project “Investment Effects of Taxation” and was involved in the study “Technological Change and Countries’ Tax Policy Design”, which is the groundwork for the project B01. He was also in exchange with the researchers of subproject A07 “Ambiguity, Learning, and the Diffusion of Reporting Practices”. We asked him about his (Mercator) experiences and his fascination for research and accounting.
Fascination for Accounting
Professor Pellens sparked my interest in accounting during my studies at the Ruhr University Bochum. His lectures showed how interesting accounting can be, so that I eventually decided to specialize in this area. I was always most interested in the use of accounting, the “How can I use financial information to learn about the economic situation of a firm?”. That is why my first job was as an equity analyst at Sal Oppenheim. The more I understood how the analyst’s business works, however, the more I wanted to understand how the expectation formation process in financial markets really works—especially the role of financial information in it. This curiosity ultimately led me to academia. I applied to U.S. Ph.D. programs with a focus on financial analysis, got lucky, and was accepted at Berkeley. There I learned how big, complex, and facetted this question “How do investors use financial information in forming expectations” really is. That there is a huge literature dedicated to this question that is still growing daily. Ever since then I have been busy trying to keep up with the literature and contribute to it. It is not something one can ever “finish”. There are always new questions coming up, prior knowledge gets questioned and revised, etc. And that keeps the work as fascinating as it was on the first day.
The Mercator Fellowship in the TRR 266
In most projects, each researcher brings a different set of expertise to the table. In our study “Technological Change and Countries’ Tax Policy Design”, for example, Alissa Brühne and Martin Jacob are the tax policy experts and I dealt with measuring technological change. Thanks to the fellowship, we had the opportunity to work together at WHU for a prolonged time. It really benefited the study. It makes a huge difference when you can look at the data together and immediately tap everyone’s expertise. Without first having to schedule a Zoom call or discuss points via email. Our collaboration worked really well, and we were able to reach the milestones we had set ourselves.
Technological change and tax policy
We investigate whether technological change leads countries to adjust their tax policies to the new economic circumstances. One finding of our current analysis is that technological change does not contribute to the “race to the bottom” of statutory tax rates. Instead, technological change incrementally predicts stricter anti-tax avoidance rules. This response varies by country size and the degree of exposure to tax competition with other countries. We will publish the new findings soon in an updated working paper.
Relevance of the Project
In this case, it is the link between technological change and tax policy. It is important for regulators to know what this link means for their own and other countries’ tax policies and how they can react to it. The subject is relevant for managers because many investment decisions are dependent on assumptions and expectations about the future tax environment. And for us researchers, it is relevant to remember that tax policy is not always exogenous to what we intend to study.
My favorite Mercator experience
I believe the Mercator Fellowship is always worthwhile. It enables us to bring far-scattered team members with different complementary sets of expertise to one place. You gain a lot from working together in one place and being able to immediately combine the expertise of all involved. It makes work efficient, ideas are generated better, and it is also more fun.
My favorite experience is exactly that: the great teamwork we had with everyone at WHU – that was simply a lot of fun.
The Mercator Fellowship in the TRR 266
The Mercator Fellowship is a module within the DFG’s funding program. It is a scholarship for prestigious researchers from Germany and abroad, who are conducting research on topics related to Accounting for Transparency and envision to spend an extended period of time at one or more of the institutions participating in the TRR 266. The TRR 266 would like to strengthen the cooperation with top-class researchers. The fellowship is intended to establish and strengthen a sustainable research relationship between the fellows and the TRR 266 researchers.
Prof. Dr. Harm Schütt
TRR 266‘s main locations are Paderborn University (Coordinating University), HU Berlin, and University of Mannheim. All three locations have been centers for accounting and tax research for many years. They are joined by researchers from LMU Munich, Frankfurt School of Finance and Management, WHU – Otto Beisheim School of Management, European School of Management and Technology in Berlin and Goethe University Frankfurt who share the same research agenda.