The quality of voluntary tax disclosure

In this paper, I investigate whether the use of three voluntary tax reporting practices—the use of a specific tax disclosure guideline, a stand-alone report, and assurance—reflects a substantive or symbolic approach to tax transparency. I use a content analysis methodology built on a framework that measures the quality of voluntary disclosure not only in terms of its content, but also in terms of its semantic properties. I find that, although the usage of the three reporting practices is associated with a higher overall quality of voluntary tax disclosure, none of the practices is associated with a substantive approach to tax transparency. I interpret this result as evidence of a symbolic use of these practices. In a context of increased interest in tax transparency, this study shows that none of the three tax reporting practices should be perceived as a firm’s committed approach to tax transparency per se. Moreover, while the three tax reporting practices are related to high tax information quantity and overall quality, my results indicate that the assumption that higher overall quality in disclosure is connected to a more substantive approach cannot be supported