Digital regulation and multinational tax avoidance: evidence from Common Reporting Standard

We adopt the implementation of the Common Reporting Standard (CRS) as a quasi-natural experiment to study the impact of digital regulation on multinational tax avoidance. Using a sample of Chinese listed firms from 2011 to 2022, we find that multinationals affected by the CRS engage in less tax avoidance. Mechanism analysis indicates that digital regulation reduces tax avoidance by improving information transparency. Furthermore, the effect is more pronounced for firms with weaker external monitoring and higher CEO compensation.