DOES PUBLIC COUNTRY-BY-COUNTRY REPORTING REDUCE IDIOSYNCRATIC RISK? EVIDENCE FROM ARTICLE 89 CAPITAL REQUIREMENTS DIRECTIVE IVTools Najda, Taufik (2020) DOES PUBLIC COUNTRY-BY-COUNTRY REPORTING REDUCE IDIOSYNCRATIC RISK? EVIDENCE FROM ARTICLE 89 CAPITAL REQUIREMENTS DIRECTIVE IV. [Dissertation (University of Nottingham only)]
AbstractWithin less than two decades, country-by-country reporting (CbCR) has emerged as one of the prominent transparency policies against tax avoidance. The benefit of CbCR for businesses by reducing their risks, mainly reputational, monetary, and sustainability risks has been well-discussed in literature. Nonetheless, empirical studies that test this causal relation is lacking. Exploiting the adoption of public CbCR by the European Union following the implementation of Article 89 of Directive 2013/36/EU, this research shed some light on whether the public CbCR policy causes a reduction of idiosyncratic risk in the listed European Banks. The study analyses 1,008 firm-years observations from 112 European listed banks between 2011-2019. As many as 36 domestic banks and 76 multinational banks constitute the sample. A Difference-in-difference estimator is employed to test the research hypothesis with European multinational banks act as the treatment group and European domestic banks act as a control group. The cut-off for the post-implementation period is 1st January 2015. This study documented robust evidence of a statistically insignificant impact of the public CbCR on idiosyncratic risk. The finding has a policy implication for the implementation of public CbCR policy and extends the literature on the impact of public CbCR.
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