Allam, A., Elmarzouky, M., Moussa, T., Hawas, A. and Karim, E. 2026. Digital Disclosure Complexity and Tax Aggressiveness: Insights from U.S. XBRL Filings. Journal of Accounting Literature. Advanced online publication. https://doi.org/10.1108/JAL-05-2025-0227
| Title | Digital Disclosure Complexity and Tax Aggressiveness: Insights from U.S. XBRL Filings |
|---|---|
| Type | Journal article |
| Authors | Allam, A., Elmarzouky, M., Moussa, T., Hawas, A. and Karim, E. |
| Abstract | Purpose – This study examines the relationship between corporate tax aggressiveness and the complexity of financial reporting using a structured, XBRL-based measure derived from machine-readable 10-K filings. While prior research has linked tax avoidance to reduced transparency using narrative-based readability metrics, this paper contributes by evaluating complexity from the preparer’s perspective in the digital reporting environment, offering new insights into disclosure behavior among tax-aggressive firms. Design/methodology/approach – The analysis is based on 18,235 firm-year observations from U.S. publicly listed firms between 2011 and 2020. We employ fixed effects regression to address unobserved heterogeneity and conduct a battery of robustness tests to mitigate endogeneity concerns, including two-stage least squares (2SLS) and difference-in-differences (DiD) analyses. Findings – The results show a positive and statistically significant relationship between tax avoidance and the complexity of XBRL filings. Tax-aggressive firms report more total XBRL tags and rely more heavily on firm-specific extended tags, suggesting a role for discretionary reporting behaviour beyond operational complexity. The relationship is stronger under higher IRS audit risk and is amplified among firms with greater financial capacity, consistent with higher-capacity firms being better able to sustain sophisticated tax strategies and the associated reporting complexity. Implications – The findings have implications for regulators such as the SEC and FASB, underscoring the importance of monitoring the customization of digital disclosures. The extensive use of extended tags in tax-sensitive contexts may challenge comparability and hinder transparency, potentially affecting the efficacy of financial reporting standards. Originality/value – Although the XBRL-based complexity measure has been introduced in earlier research, this study applies it in a novel context by linking it to corporate tax avoidance. The approach expands the understanding of reporting complexity beyond narrative readability and contributes to a deeper understanding of how digital reporting structures relate to tax planning behavior. |
| Keywords | Tax avoidance |
| financial reporting complexity | |
| XBRL | |
| digital disclosures | |
| extended tags | |
| corporate transparency | |
| Journal | Journal of Accounting Literature |
| ISSN | 0737-4607 |
| Year | 2026 |
| Publisher | Emerald Publishing Limited |
| Accepted author manuscript | License CC BY-NC 4.0 File Access Level Open (open metadata and files) |
| Digital Object Identifier (DOI) | https://doi.org/10.1108/JAL-05-2025-0227 |
| Publication dates | |
| Published online | 01 Jun 2026 |