Does tax return disclosure affect information asymmetry among investors?

Tax return information is often complex and difficult to interpret. Whether its public availability benefits unsophisticated users remains an empirical question. This study examines whether disclosure of tax affects asymmetry among more- less- sophisticated investors. I investigate the unique setting mandatory three bottom-line income items in Australia. Using a difference-in-difference design with entropy-balanced control group, find evidence that decreased after disclosure. The effect more pronounced for firms poorer environment, higher individual ownership, lower media attention. magnitude postdisclosure decline bid-ask spread correlates degree absolute book-tax gap expense. result concentrated only disclosure—without any voluntary commitment or Overall, results suggest does have potential reduce