No. 94: Public tax disclosures and investor perceptions

Year: 2022
Type: Working Paper


To reveal whether firms pay their fair share of taxes, regulators are increasingly mandating public tax disclosures. Such disclosures are often assumed to raise public attention and help non-professional stakeholders, such as retail investors, identify aggressive tax avoiders. We conduct two experiments to test this assumption. Our first experiment indicates that retail investors become worse at identifying aggressive tax avoiders when disclosures focus on bottom-line tax numbers because such disclosures invite them to use these exclusively as heuristics. The results of the second experiment demonstrate that policies to counteract the adverse effects of public tax disclosures, such as requiring the provision of a disclaimer, are helpful but that none are fully effective.

Participating Institutions

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, Goethe University Frankfurt, University of Cologne and Leibniz University Hannover who share the same research agenda.

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