Simplified reporting and annual report submission practices of micro companies: evidence from Estonia

Purpose This study examines the association between the introduction of simplified reporting under Directive 2013/34/EU and the annual report submission practices of Estonian micro companies. Design/methodology/approach We use a difference-in-differences (DID) design to examine regulatory effects in a panel of 77,294 observations covering 2013–2015 (pre-reform) and 2016–2018 (post-reform). Findings The DID estimates suggest that simplified reporting adoption in 2016 was associated with an estimated 15–16 percentage-point increase in the proportion of reports submitted during 2016–2018 compared to 2013–2015. The corresponding associations were smaller for timeliness, with an estimated 5–6 percentage-point increase in the proportion of reports submitted on time and a 10–12 percentage-point increase in the proportion submitted within three months of the deadline. Practical implications The findings suggest that reporting simplification may improve compliance, but its effectiveness is likely to depend on complementary enforcement mechanisms and broader institutional conditions. Given the importance of annual report data for statistical and regulatory purposes, even modest company-level changes may have meaningful aggregate implications. Originality/value Unlike prior studies that examine reporting lags conditional on submission and implicitly exclude non-filers, this study examines both whether a report is submitted and, if so, how promptly, using population-level data. It provides the first evidence on the voluntary adoption of simplified reporting among micro companies, extending research on Directive 2013/34/European Union and reporting timeliness.