I am a postdoctoral researcher at the University of Münster (Germany).
My primary research interest lies at the intersection of financial accounting, taxation, and labor-related research, where I examine how multinational firms respond to disclosure and tax regulations by examining the interplay between internal and external information flows.
University of Münster
Universitätsstr. 14-16
D-48143 Münster
Germany
Country-by-Country Disclosures and Firms' Internal Information Environments
with Christoph Watrin
We examine the relationship between country-by-country disclosures and the internal information environments of multinational entities (MNEs). We argue that the introduction of U.S. country-by-country reporting (CbCR) increases affected firms’ need for effective internal information flows, as country-specific information is not readily available for disclosure. However, the disclosure mandate simultaneously adds complexity to firms’ reporting environments. Using a difference-in-differences design, we find that firms affected by U.S. CbCR make more efficient investment decisions, utilize existing resources more efficiently, and report fewer financial restatements than firms not affected by the mandate. These effects are concentrated in the first year following the introduction of U.S. CbCR. Our findings are robust across various placebo tests and alternative research designs. Supplemental regression discontinuity analyses reinforce our main results. Moreover, we find that improvements in internal information quality are concentrated in accounting items directly tied to U.S. CbCR, suggesting that firms improve information flows to meet the mandate’s specific disclosure requirements. Finally, we show that our findings depend on disclosure practices and organizational complexity prior to the mandate. Our results suggest that U.S. CbCR prompts MNEs to alter their internal information processing structures, improving financial reporting and operational efficiency.
Keywords: BEPS; country-by-country reporting; internal control systems; internal information flows; investment efficiency; regulation; resource utilization; restatements; tax transparency