While prior research infers private firms’ reporting incentives from observed financial statements and institutional settings, we provide direct experimental evidence from managers on their firms’ earnings management (EM) practice and the motivations associated with it. We conduct a large-scale online survey experiment among German private firms and randomly assign participants to a direct question, an indirect question, or a list experiment designed to protect respondent privacy. On average, 20 percent of respondents report engaging in accrual-based EM, and the prevalence estimates are statistically indistinguishable between direct questioning and the list experiment. However, relative to the list experiment, managers directly asked are less likely to report potentially sensitive motives, such as securing better credit terms or influencing perceptions of business partners. No comparable difference emerges for tax-related motives. These findings suggest that private-firm managers are willing to acknowledge EM but selectively report certain motivations associated with it.

How do corporate tax systems shape firm boundaries? This paper shows that nonlinear corporate income taxation (CIT) can distort firms’ organizational structures by inducing tax‐motivated firm splitting. I use administrative data on corporations and their owners and exploit two reforms that altered the tax benefits and costs of dividing a firm into multiple entities. I find that a temporary increase in the tax advantage of splitting reduces the share of firms filing jointly for CIT purposes. Once the benefit is perceived as permanent and minimum capital requirements for new firms are abolished, the number of firms per entrepreneur rises significantly and persistently. Reorganizations are primarily driven by tax motives, as I find no effect on firms' total assets, employment, or industry diversification. These findings highlight extensive-margin responses of business organization to corporate taxation, with relevant implications for the understanding of firm dynamics and for tax design.

Zombie firms are firms that continue to operate despite prolonged periods of financial distress. When part of a group, such firms may serve as tax planning instruments by facilitating profit shifting or loss offsets. This paper studies the role of zombie firms in group-level tax planning by examining their response to DAC6, an EU directive mandating the disclosure of aggressive tax planning arrangements. Using firm-level data from ORBIS and a differences-in-differences design, I find that following DAC6, group zombie firms in the EU are more likely to exit the market than their non-EU counterparts. Among surviving firms, the probability of remaining a zombie declines for EU group firms. Heterogeneity analyses show that both firm location and group headquarters location shape these responses, highlighting how zombie firms are used within groups for tax planning purposes.