Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/306750 
Year of Publication: 
2024
Series/Report no.: 
IES Working Paper No. 37/2024
Publisher: 
Charles University in Prague, Institute of Economic Studies (IES), Prague
Abstract: 
Country-by-country reporting aims to curb tax avoidance by multinational corporations and increase transparency in the tax system. This paper provides the first evidence of the effect of country-by-country in developing countries, focusing on the market response of the African stock market to this regulation. Using an event study design, the results indicate a significant negative market response for firms subject to CbCR requirements. Tax-aggressive firms show a pronounced significant negative response around the event date, suggesting that investors anticipate increased tax liabilities due to heightened scrutiny of their tax planning practices, potentially reducing future profits. Cross-listed firms exhibit a positive significant market response in foreign markets, while the broader domestic market shows a negative reaction, underscoring the variation in how foreign and domestic investors process similar information. This paper sheds light on how regulatory transparency influences investor sentiment across different markets.
Subjects: 
country-by-country reporting
developing countries
event study
cross-listed firms
heterogeneous treatment effect
generalised random forest
JEL: 
F23
H25
H26
G14
Document Type: 
Working Paper

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