The Big Four’s dual role challenges trustTheir position makes them structurally important organisations whose interests and governance have societal consequences, notes Saila Stausholm:
“If they appear open in one country but closed in another, it undermines their credibility everywhere. Especially since we know that their work in less transparent jurisdictions is often linked to tax avoidance, which has real and damaging effects such as increased inequality and weakened public finances.”
The study is based on an extensive mapping of the corporate structures of the Big Four across countries and jurisdictions.
The researchers analysed publicly available company data and registries to understand how the companies organise their activities in low-tax jurisdictions and use cross-border structures to reduce transparency.
When addressing authorities, investors and the public in Europe, the Big Four emphasise openness and accountability. On their Danish websites, for instance, information about governance, diversity and corporate structure is easily available.
But the same companies appear far more secretive in other countries, particularly in so-called offshore jurisdictions such as Bermuda and the Cayman Islands. In these places, even basic information such as the number of employees or the composition of management may be missing.
According to the researchers, this is no coincidence. The jurisdictions where information is most limited are often the same ones used to minimise tax.
Potential for regulationIn recent years, the EU and OECD have introduced country-by-country reporting requirements for large companies. However, these rules do not apply to the accounting companies, as they are formally organised as networks of independent entities rather than as multinational corporations.
According to Saila Stausholm, this complex structure is key to understanding the varying levels of transparency.
“The Big Four market themselves as global organisations, but in legal terms they are made up of local partnerships, which means they can present themselves as a single global brand while avoiding being treated as true multinational companies,” she explains and adds:
“The structure offers flexibility. It allows them to provide seamless services across borders, but it also fragments responsibility. To regulators they can say, ‘We are only responsible for our local entity.’ To clients they can say: ‘We can support you globally.’”
The study suggests that new rules could require accounting firms to disclose more information about their activities and finances in each country, however, greater transparency alone may not solve the issue. The researchers therefore point to another possible step: separating auditing from advisory and consulting services. Independent auditors would then have a clearer incentive to identify errors, fraud and potentially aggressive tax planning.
