IDEAS home Printed from https://ideas.repec.org/p/fau/wpaper/wp2024_37.html
   My bibliography  Save this paper

Stock Market Reaction to Increased Transparency: An Analysis of Country-By-Country Reporting in Developing Countries

Author

Listed:
  • Bathusi Gabanatlhong

    (Institute of Economic Studies, Charles University, Prague, Czech Republic)

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.

Suggested Citation

  • Bathusi Gabanatlhong, 2024. "Stock Market Reaction to Increased Transparency: An Analysis of Country-By-Country Reporting in Developing Countries," Working Papers IES 2024/37, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Oct 2024.
    • Handle: RePEc:fau:wpaper:wp2024_37
    as

    Download full text from publisher

    File URL: https://ies.fsv.cuni.cz/en/stock-market-reaction-increased-transparency-analysis-country-country-reporting-developing
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    country-by-country reporting; developing countries; event study; cross-listed firms; heterogeneous treatment effect; generalised random forest;
    All these keywords.

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fau:wpaper:wp2024_37. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Natalie Svarcova (email available below). General contact details of provider: https://edirc.repec.org/data/icunicz.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.