Corporate responses to the threat of public shaming: evidence from the European Union

Offshore wealth is estimated to equal 10% of global GDP.To curb tax avoidance, policymakers have adopted tax transparency reforms.We analyze the impact of the EU's Directive on Public Country-by-Country Reporting, which mandates that large multinational corporations disclose key financial data.We find evidence that firms subject to higher media scrutiny and with ESG scores increased their effective tax rates by 5-8 percentage points (pp) in anticipation of the public disclosure of their data.In contrast, we find that banks, which are exempt from the Directive, decreased their tax rates by more than 8 pp.We document how NGO attention on banks has subsided since the announcement of the exemption, suggesting that banks may be taking advantage of reduced civil society scrutiny as attention shifts away from the industry.