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Marcel Olbert’s research examines the real effects of public Country-by-Country Reporting on multinational enterprises
The National Bureau of Economic Research (NBER) has awarded London Business School Assistant Professor of Accounting Marcel Olbert funding to study the effects of public Country-by-Country (CbC) Reporting on international investment decisions and tax payments of multinational enterprises (MNEs).
CbC Reporting is a new and fundamental tax transparency regulation aimed at limiting harmful tax competition among countries and aggressive tax avoidance by MNEs. It requires MNEs to prepare a comprehensive report with operational and financial information for every tax jurisdiction in which they operate.
Whether these CbC disclosures should be made public or accessible only to tax authorities has been debated. Regulators argue that public CbC Reporting and the potential for loss of reputation may help deter tax avoidance and incentivise MNEs to focus on sustainability or the ‘social’ aspects of ESG. This is because CbC reports would let the public form their own opinion on whether international companies pay their ‘fair share’ of taxes globally.
The Council of the EU has provisionally agreed to the introduction of public CBC Reporting across all 27 EU member states from June 2024.
This increased mandatory public transparency is likely to impact firms’ effective tax rates and allocation of production activities worldwide.
Dr Olbert and his co-investigator Beatrice Michaeli of the UCLA Anderson School of Management study these effects through the use of theoretical models, empirical tests and a novel database. Early findings suggest public CbC Reporting drives affected MNEs to shift investment strategies and resources, and change their innovation behaviour. The authors suggest this is due the forced public disclosure of operational or financial information that may be advantageous to peers.
Dr Olbert said he was thrilled to hear from NBER President James Poterba that his and Dr Michaeli’s research proposal to further their investigation had been successful.
“It is not common for junior researchers outside the US to receive this kind of support,” he said.
“I perceive it as a great signal that our proposed research is highly policy relevant and has the potential to make a contribution to the academic literature and public debate.
“I am looking forward to the opportunities that come with this award”.