nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2006‒05‒13
five papers chosen by
Alexander Harin
Modern University for the Humanities

  1. Tax Compliance and Firms' Strategic Interdependence By Ralph-C Bayer; Frank Cowell
  2. Corporate Tax Evasion and Extortionist Governments By Ralph-C Bayer; Julia Kupzowa
  3. The debates on Rignano's inheritance tax proposal. By Guido Erreygers; Giovanni Di Bartolomeo
  4. The Complex Attitudes to Alcohol Taxation By Nordblom, Katarina
  5. Estimation of the Default Risk of Publicly Traded Canadian Companies By Georges Dionne; Sadok Laajimi; Sofiane Mejri; Madalina Petrescu

  1. By: Ralph-C Bayer (School of Economics, University of Adelaide); Frank Cowell
    Abstract: We focus on a relatively neglected area of the tax-compliance literature in economics, the behaviour of firms. We examine the impact of alternative audit rules on receipts from a tax on profits in the context of strategic interdependence of firms. In the market firms may compete in terms of either output or price. The enforcement policy can have an effect on firms' behaviour in two dimensions - their market decisions as well as their compliance behaviour. An appropriate design of the enforcement policy can thus have a "double dividend" by manipulating firms in both dimensions.
    Keywords: Tax compliance, evasion, oligopoly.
    JEL: H20 H21
    Date: 2006–05
  2. By: Ralph-C Bayer (School of Economics, University of Adelaide); Julia Kupzowa
    Abstract: We present a simple model of corporate tax evasion allowing for potentially bad governments that abuse their fiscal powers to extort monies from firms. Our model shows that the potential existence of extortionist governments provides incentives for corporate tax evasion and increases enforcement costs.
    Keywords: Tax Evasion, Extortion, Corporate Taxation.
    JEL: H26 H11 D82
    Date: 2006–05
  3. By: Guido Erreygers; Giovanni Di Bartolomeo
    Abstract: In the inheritance tax debates of the 1920s the proposals formulated by the Italian philosopher Eugenio Rignano occupied a prominent position. Since then, his contribution has been largely, although not completely, forgotten. This paper reviews the Rignano’s ideas by focusing upon its origins and upon the reactions to Rignano’s proposal in the 1920s, both in Italy and elsewhere.
    Keywords: inheritance tax debates, economic thought, Rignano’s proposal..
    JEL: B31 B51 H21 H24 H63
    Date: 2005–07
  4. By: Nordblom, Katarina (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: Alcoholic beverages are taxed at very different rates across the European Union, which implies extensive cross-border shopping. Therefore, there is an ongoing debate about harmonization of alcohol taxes among countries. Sweden, with a tradition of high alcohol taxes due to public health arguments, has the highest alcohol taxes in the EU. But, because of this, the occurrence and possible problems caused by cross-border shopping are also extensive. Using a questionnaire survey I analyze the attitudes of Swedes’ to alcohol taxation and find that these two sides of the coin are important determinants. Many respondents want to decrease the alcohol tax, while some even want to increase it. Those most reluctant to a tax cut are those who regard increased alcohol consumption as a worrying problem and those living in areas where many adults are treated for alcohol related diseases. However, those who support the EU membership are more likely to support a tax cut to harmonize the Swedish tax with those in other EU countries. Those who live in regions where privately imported alcohol is substantial are also more positive toward a tax cut. <p>
    Keywords: taxation; cross-border shopping; tax harmonization; attitudes
    JEL: F15 H20
    Date: 2006–05–05
  5. By: Georges Dionne; Sadok Laajimi; Sofiane Mejri; Madalina Petrescu
    Abstract: In this paper, we investigate the hybrid contingent claim approach with publicly traded Canadian companies listed on the Toronto Stock Exchange. Our goal is to assess how combining their continuous valuation by the market with the value given in their financial statements improves our ability to predict their probability of default. Our results indicate that the predicted structural probabilities of default (PDs from the structural model) contribute significantly to explaining default probabilities when PDs are included alongside the retained accounting variables. We also show that quarterly updates to the PDs add a large amount of dynamic information to explain the probabilities of default over the course of a year. This flexibility would not be possible with a reduced-form model. We also conducted a preliminary analysis of correlations between sructural probabilities of default for the firms in our database. Our results indicate that there are substantial correlations in the studied data.
    Keywords: Default risk, public firm, structural model, reduced form model, hybrid model, probit model, Toronto Stock Exchange, correlations between default probabilities
    JEL: G21 G24 G28 G33
    Date: 2006

This nep-acc issue is ©2006 by Alexander Harin. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.