Anticipatory effects of corporate tax shaming: evidence from the European Union

Offshore wealth is estimated at 10% of global GDP.To curb tax avoidance, policymakers have adopted tax transparency reforms.We analyze anticipatory effects associated with the EU's Directive on Public Country-by-Country Reporting, which mandates that large multinational corporations disclose key financial data starting in 2026.Firms subject to higher media scrutiny and with ESG scores increased their effective tax rates by 5-8 percentage points (pp) after the announcement of the Directive in 2021.In contrast, we find that banks, which are exempt from the Directive, decreased their tax rates by more than 7 pp.We point to changes in the media spotlight and NGO scrutiny to explain, in part, the heterogeneity in responses across industries.