In December 2017, the European Union (EU) published the first iteration of its tax blacklist. The EU's blacklist aims to be a policy tool to fight tax avoidance by naming countries that fail to comply with good tax governance criteria. This paper uses a difference-in-differences model with staggered treatment to evaluate the effectiveness of the EU's blacklist on curbing corporate tax avoidance. I use the creation and operation of subsidiaries by multinational corporations as a proxy for corporate tax avoidance to estimate the causal effects of the blacklist. The model estimates reveal that while a jurisdiction being named on the blacklist has statistically insignificant effects, the implementation of policy reforms by a blacklisted jurisdiction has significant negative effects on the number of subsidiaries created and operated in that jurisdiction. As such, the results suggest that the EU should focus on ensuring that adding a country to the blacklist leads to policy changes rather than relying on reputational pressure to motivate changes in behavior.
Jennifer Cresap (Sun,) studied this question.