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on Accounting and Auditing |
| By: | Paolo Panteghini |
| Abstract: | This article studies the relationship between debt policies of multinational companies (MNCs) and governments’ tax strategies. In the first part, it is shown that the ability to shift income from high- to low-tax countries affects MNCs’ financial choices. In the second part we show how MNCs’ financial decisions can affect the tax strategies of two governments competing to attract income. |
| Keywords: | capital structure, country risk, default, multinationals, tax competition |
| JEL: | G31 H25 H32 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_1721&r=acc |
| By: | Swift, Zhicheng Li |
| Abstract: | Tax expenditures, in the form of tax provisions, are government expenditures. They are conceptually and functionally distinct from those tax provisions whose purpose is to raise revenue. Tax expenditure programs are comparable to entitlement programs. Therefore, tax expenditures must be analyzed in spending terms and integrated into the budgetary process to ensure fiscal accountability. In addition, tax expenditures must be audited for performance and the information must be published (with comprehensive analysis) to ensure fiscal transparency. The author analyzes the concept and definition, size, and effects of tax expenditures, as well as the fiscal accountability and transparency of tax expenditure spending. In short, tax expenditures affect (1) the budget balance, (2) budget prioritization in allocation, (3) the effectiveness and efficiency of fiscal resources, and (4) the scope for abuse by taxpayers, government officials and legislators. While reviewing the current practices in tax expenditures against the requirements of fiscal accountability and transparency, she finds that this fiscal area must be strengthened. The author sketches four building blocks to strengthen tax expenditures toward fiscal accountability and transparency, based on the literature developed by Surry and McDaniel, the practices from industrial and developin g countries, the Campos and Pradhan fiscal accountability model, and the International Monetary Fund ' s fiscal transparency code. The author argues that normative/benchmark tax structure, a revenue-raising component of the tax system, should be formalized. The normative/benchmark tax structure should be legally defined in the tax law and should be transparent. The tax receipts from this normative/benchmark tax structure should be quantified and published. Presently, many countries could publish imputed tax revenue from normative/benchmark tax structures because such data is available. Only if imputed tax revenue is published in the same way as the other budget components-tax revenue received, tax expenditures, direct expenditures, and fiscal balance-will a budget system be truly transparent in terms of revenue-raising activities and expenditure activities. In addition, when the tax revenue-raising activity is formalized, the inherent spending nature of tax expenditures is further exposed. Therefore, tax expenditures should be added to direct expenditures forming total government expenditures. Furthermore, the conventional concept of the size of government should be remedied by including both direct expenditures and tax expenditures. |
| Keywords: | Public Sector Economics & Finance,Tax Law,Fiscal Adjustment,Public Sector Fiscal Adjustment,Economic Theory & Research |
| Date: | 2006–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3927&r=acc |
| By: | Willem Adema; Maxime Ladaique |
| Abstract: | This is the 2005 edition of a Net Social Expenditure paper that contains information on net (after tax) public and private social expenditure. These indicators supplement the detailed historical information on gross (before tax) publicly mandated social expenditure in the OECD Social Expenditure Database by accounting for the varying roles of voluntary private social spending and the tax system on social policy across OECD countries. Government intervention through the tax system affects social spending as governments levy direct taxes and social security contributions on cash transfers, and indirect taxes on goods and services bought by benefit recipients. In addition, governments may award tax advantages similar to cash benefits and/or grant tax concessions aiming to stimulate the provision of private social benefits. Through compulsion and tax relief public policy contributes to private pension plans, and such arrangements are generally considered within the social domain. This document refines the methodological framework previously developed per earlier editions of net social expenditure and presents indicators based on a common questionnaire for twenty-three OECD countries for which information on taxation of benefits in 2001 is now available: Australia, Austria, Belgium, Canada, the Czech Republic, Denmark, Finland, France, Germany, Iceland, Ireland, Italy, Japan, Korea, Mexico, the Netherlands, New Zealand, Norway, the Slovak Republic, Sweden, Spain, the United Kingdom and the United States. Accounting for the impact of the tax system and private social expenditure leads to a greater similarity in social expenditure to GDP ratios across countries and to a reassessment of the magnitude of welfare states. Usually, Denmark and Sweden are seen as the biggest social spenders. After accounting for the impact of taxation social expenditure to GDP ratios appear highest in France, Germany and Sweden. Ce document est l’édition 2005 du rapport sur les Dépenses sociales nettes (après imposition) publiques et privées. Ces indicateurs ont été développés afin d’apporter un supplément aux informations historiques détaillées des dépenses sociales publiques brutes (avant imposition) obligatoires disponibles dans la Base de données des dépenses sociales de l’OCDE (SOCX), en tenant compte des différentes fonctions des dépenses sociales privées volontaires et l’impact du système d’imposition sur les politiques sociales dans les pays OCDE. L'intervention des gouvernements au travers du système d’imposition a un impact sur les dépenses sociales. En effet, ils perçoivent à la fois des impôts directs et des cotisations de sécurité sociale sur les transferts en espèces, mais aussi des impôts indirects sur les marchandises et les services achetés par les bénéficiaires. De plus, les gouvernements peuvent accorder des déductions fiscales similaires à des prestations en espèces et/ou accorder des allégements fiscaux dans le but d’inciter les agents (instituts et/ou individus) privés à avoir recours aux assurances sociales. Par ces obligations et allègements fiscaux, les politiques publiques encouragent la couverture privée des risques ; de telles dispositions relèvent du domaine social. Ce document redéfinit le cadre méthodologique développé dans les éditions précédentes des dépenses sociales nettes, et présente des indicateurs issus d’un questionnaire envoyé à vingt-trois pays pour lesquels les informations sur l’imposition des prestations pour 2001 sont désormais disponibles : Allemagne, Australie, Autriche, Belgique, Canada, Corée, Danemark, Espagne, États-Unis, Finlande, France, Islande, Irlande, Italie, Japon, Mexique, Norvège, Nouvelle-Zélande, Pays-Bas, République tchèque, République slovaque, Royaume-Uni et Suède. L’ajustement « impôt et dépenses privées » montre une plus grande similitude en terme de dépenses sociales en pourcentage du PIB entre pays, et donne aussi une nouvelle vision de l’ampleur des états protecteurs. Habituellement, le Danemark et la Suède sont considérés comme les pays aux dépenses sociales les plus importantes. Après ajustement, ce sont ici la France l'Allemagne et la Suède qui apparaissent en tête. |
| JEL: | H2 H53 |
| Date: | 2005–12–16 |
| URL: | http://d.repec.org/n?u=RePEc:oec:elsaab:29-en&r=acc |
| By: | Juan Vianey Gómez Jiménez; Julieth Emilse Ospina Delgado |
| Abstract: | RESUMEN En el actual contexto económico la divulgación de información que dé cuenta de las actividades de las empresas ha cobrado gran importancia en el mundo empresarial; a tal punto, que diversos autores han evidenciado en sus estudios empíricos que una política de transparencia se relaciona positivamente con la reputación de la empresa, lo que a su vez ejerce influencia significativa sobre su valor. Sin embargo, la ausencia en las empresas de sistemas de información que atiendan las crecientes demandas de información de los usuarios, ha servido para que empresarios, directivos, academia, organismos reguladores, firmas auditoras y profesionales de la contaduría, entre otros, realicen investigaciones y diversos eventos con el fin de presentar propuestas que ayuden a disminuir esta brecha informativa. En ese cuestionamiento a los sistemas de información, la contabilidad ocupa un lugar importante debido a su gran contribución en la generación de información empresarial. Sin embargo, es claro que en algunos de los escándalos atribuidos a las fallas en los sistemas de información contable, no han sido propiamente sus falencias como modelo, sino el manejo inescrupuloso y fraudulento que hicieron algunos empresarios y ejecutivos de empresas, entre otros aspectos, lo que ha contribuido a que se pierda la confianza en las empresas y en su información. La demanda por mayor transparencia crece. La sociedad exige que las empresas actúen responsablemente, y a la vez quiere conocer como cumplen su rol de buenos ciudadanos corporativos. La propuesta de las Naciones Unidas, a través del Global Reporting Initiative (IniciativaMundial para la Elaboración de Informes), emergecomo una herramienta para contribuir con la transparencia y recuperar la confianza en las organizaciones y en la información que producen. A pesar de ser una propuesta reciente que está en la primera etapa, ya aglutina a muchas ABSTRACT In the present economic context the publication of information on companies’ activities has become very important in the business world, to the point where several authors have manifested in their empirical studies that a policy of transparency is related positively to a company’s reputation, which in turn has a significant influence on its worth. Nevertheless, the absence of information systems in companies that respond to the increasing demands for information from their users has served to make businessmen, directors, educational institutions, regulating entities, auditors and accounting rofessionals, among others, carry out research and other activities with the aim of making proposals to close this information gap. In this process of questioning information systems, accounting occupies an important place because of its great contribution to the production of company information. Nevertheless it is clear from some of the scandals attributed to failures in accounting systems, that this has not been due to its own failings as a model, but to the unscrupulous and fraudulent behaviour of some businessmen and company executives, among other things, that has contributed to the lack of trust in the companies and their information. The need for more transparency continuesto grow. Society demands that companies act in a responsible way and that they comply with their duty as good corporate citizens. The proposal of the United Nations, through their Global Reporting Initiative (World Initiative for the Preparation of Information) is seen as a tool to contribute to this transparency and win back the trust in companies and the information they produce. In spite of the fact that this proposal is recent and it its first stage, it has already brought together many companies in the world which have wholly or partially identified with it. |
| Date: | 2005–10–31 |
| URL: | http://d.repec.org/n?u=RePEc:col:001042:002438&r=acc |
| By: | Dirk Schindler; Guttorm Schjelderup |
| Abstract: | We study how harmonization of corporate tax systems affects the stability of international cartels. We show that tax base harmonization reinforces collusive agreements, while harmonization of corporate tax rates may destabilize or stabilize cartels. We also find that bilateral and full harmonization to a common standard is worse from society’s point of view than unilateral harmonization to a minimum tax standard. |
| Keywords: | corporate tax systems, tacit collusion |
| JEL: | H87 L10 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_1702&r=acc |
| By: | Pablo Sanguinetti; Martin Besfamille |
| Abstract: | In many countries fiscal decentralization characterizes the relationship among different levels of government. In those countries, local authorities have the prerogative to tax their constituencies. However, fiscal decentralization is seldom balanced in terms of tax and expenditure assignments. In order to equalize tax capacities, to internalize spillovers or to achieve national policy objectives, central governments often provide transfers to lower levels of government. These transfers may affect the incentives to manage or to improve fiscal performance. Specifically, according to Litvack, Ahmad and Bird (1998), such transfers may induce low `tax effort' in the regions. The purpose of this paper is to investigate theoretically and empirically this relationship between intergovernmental transfers and local tax effort. An initial problem to deal with is the definition of `tax effort' in itself. First, one can associate tax effort to high tax rates. Smart (1998) asserted that such association is inadequate. Second, one can measure tax effort using actual tax revenues or the difference between actual the predicted value of tax revenues. This approach has been mainly adopted by the empirical literature on the relationship between intergovernmental transfers and local tax effort [Baretti, Huber and Lichtblau (2000), Von Hagen and Hepp (2000), Jha, Mohanty, Chattergee and Chitkara (1999), Sagbas (2001)]. Although tax revenue is an accurate and observable variable, still one can hardly say that it is a good estimate of tax effort. The reason is for a given region in a given time period tax revenue is affected by many potential variables outside the control of local governments (like idiosyncratic shocks to some specific tax bases) which are seldom well controlled for in estimates of tax capacity. In practice local tax effort encompasses a broad set of actions. One of them is clearly the battle against tax evasion. In spite of its importance, this problem has been only recently addressed by the local public finance literature. Bordignon, Manasse and Tabellini (1996), presented a model where a local government exerts costless effort to catch tax evader workers and they showed how intergovernmental transfers affect tax enforcement. The drawback of this model is that, in reality, tax enforcement is not costless and the cost depends upon other variables chosen by local authorities, like the efficiency of the local tax administration. Although Prud'homme (1995) and Tanzi (1996) have informally signaled the possible inefficiencies of the local tax administrations, this feature has not been raised by the theoretical or the empirical literature. The purpose of this paper is precisely to incorporate such dimension in the assessment of the relationship between intergovernmental transfers and local tax effort. The theoretical framework assumes that in each region there is one representative habitant and a local government. The habitant posses a low or a high-valued property. The local government maximizes tax revenues. In a first period, the local government invests resources to improve the efficiency of the tax administration or to lobby the central government in order to obtain discretionary transfers. This decision is affected by the political cost of reforming the tax administration and on the ability of the local government to negotiate with the central government. Thus, in our model, intergovernmental transfers are endogenous and simultaneously determined with the reform of the local tax system. In a second period, the local government sets the property tax schedule. But, as the local government is unable to observe the value of the property, it has to rely on the habitant announcing this value. Finally, in the third period, the local government decides to enforce the tax law by randomly auditing such announcement. If the habitant is discovered having misreported, the local government sets the corresponding property tax and imposes a penalty. We assume that audit is perfect but costly; the cost depending on the efficiency of the local tax administration. We solve the model backwards. As the local government cannot commit to the auditing probability when it designs its tax policy, the equilibrium of the audit-report game is in mixed strategies, with auditing and tax evasion. Then we find the optimal tax schedule. In order to reduce the stake for tax evasion, the local government distorts downwardly the high-valued property tax. Finally, we solve for the decision of the local government regarding how much resources to invest for improving the efficiency of the tax administration. We find that this decision is negatively associated with the domestic political costs and positively with the ability to negotiate with the Federal Government. The predictions of the model are empirically tested using data for Argentina. The theory suggests a two-step approach. In a first stage we run a probit estimation where the probability of a certain province to reform its tax system (or receiving discretionary transfers) in a given year will be correlated with domestic political variables (e.g. divided government) and also with variables describing its bargaining power vis a vis the federal authorities (e.g. political representation at the National Congress, political party of the President vis a vis that of the Governor). In a second stage, we include this exogenous instrument of tax reform in a regression where the evolution of actual provincial tax receipts are regressed against this variable plus other controls like population, density, provincial income distribution and production structure. Notice that this two stage empirical approach allow us to deal with a frequent problem encountered in the empirical literature given by the endogeneity bias affecting some of the variables of interest, like federal transfers (e.g. Jha, Mohanty, Chattergee and Chitkara (1999), Sagbas (2001)). |
| Keywords: | local tax effort - discretionary transfers - tax enforcement |
| JEL: | H26 |
| Date: | 2004–08–11 |
| URL: | http://d.repec.org/n?u=RePEc:ecm:latm04:249&r=acc |
| By: | Ayadi, N.; Rastoin, J.L.; Tozanli, S. |
| Abstract: | Based on a neo-institutionalist theoretical framework and using the Agrodata databank, the present paper analyses the main drivers underlying the restructuring operations of the top 100 multinational food processing enterprises worldwide and draws the map of the world's new agri-food landscape. World's agri-food oligopoly came out during these last decades concentrating an ever increasing financial and economic power (in 2002, the total value production of the top 100 food multinationals weighted for 27 % of the total production of the world food processing industry). Under constant pressure to improve their financial and economic performances, food processing enterprises face considerable constraints inherent in their international business environment : increasing international rivalry resulting from the adoption of liberalising economic policies by a large number of developing countries; importance that gain the financial spheres in world's agri-food chain; changing eating habits and consumer behaviour. Leadership seeking on large regional and/or world base in highly segmented markets pushes the top 100 food multinationals to reorganise their internal and external structures by adopting streamlining and cost cutting strategies while targeting larger geographical expansion thanks to mergers and acquisitions as well as partnerships that they realise. Consequently, they reshape world's agri-food lanscape and give way to the emergence of new finance-oriented governance patterns. ...French Abstract : En mobilisant une grille de lecture néo-institutionnaliste et en s'appuyant sur la base de données Agrodata, ce document analyse les logiques qui sous-tendent les restructurations des 100 premières firmes multinationales agroalimentaires mondiales et la nouvelle carte du monde agroalimentaire qui en résulte. On montre ainsi qu'un oligopole agroalimentaire de dimension internationale s'est progressivement constitué et que son poids économique et financier ne cesse de croître (les 100 premiers groupes mondiaux représentaient en 2002 près de 27% du chiffre d'affaires du secteur). L'intensification de la concurrence impulsée par l'ouverture des marchés, la financiarisation du secteur et les changements dans les comportements des consommateurs ont imposé aux entreprises de nouveaux impératifs de performance. La recherche du leadership macro-régional, voire mondial, sur des marchés de plus en plus segmentés conduit cet oligopole à mener des opérations de restructuration visant la rationalisation des coûts tout en soutenant une croissance externe (acquisitions, fusions, cessions, partenariats). Le profil du secteur au niveau mondial s'en trouve reconfiguré et l'on assiste à l'apparition de nouveaux types de gouvernance, plus financiarisés. |
| Keywords: | MULTINATIONAL ENTERPRISES; STRATEGY; RESTRUCTURING; ECONOMIC PERFORMANCES; AGRI-FOOD MARKETS |
| JEL: | L1 L25 M21 M40 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:umr:wpaper:200608&r=acc |
| By: | Coelho, A.; Rastoin, J.L. |
| Abstract: | The purpose of this work is to draw a panorama of the evolution of the restructuring strategies of the transnational firms in the world wine industry across the period 1980-2005. The main forms of development of these firms - mergers, acquisitions, and joint ventures - are identified based on an ad-hoc database (W2D-World Wine Data). The strategies of the firms are explained based on three key elements: production facilities (vineyard and winery), corporate brands portfolio, and distribution networks. This assessment anticipates an intensification of the globalisation and competition in the future world wine market. ...French Abstract : L'objectif de ce travail est de présenter un panorama de l'évolution des stratégies de restructuration des grandes firmes de l'industrie mondiale du vin au cours de la période 1980-2005. Les principaux modes de développement des firmes - fusions, acquisitions et joint-ventures -, sont repérés à partir de la constitution d'une banque de données ad-hoc (W2D-World Wine Data). Les stratégies des majors de l'industrie apparaissent basées sur 3 éléments : l'outil de production (vignoble et cave), le portefeuille de marques, les réseaux de distribution. Ce repérage permet de pronostiquer une intensification de la globalisation et de la concurrence sur le marché mondial du vin dans les années à venir. |
| Keywords: | TRANSNATIONAL FIRMS; WINE CLUSTER; STRATEGY; CORPORATE RESTRUCTURING; MARKET |
| JEL: | L1 L25 M21 M30 M40 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:umr:wpaper:200607&r=acc |
| By: | Josep Lluís Boned; Llorenç Bagur; Mike Tayles |
| Abstract: | Cost systems have been shown to have developed considerably in recent years and activity-based costing (ABC) has been shown to be a contribution to cost management, particularly in service businesses. The public sector is composed to a very great extent of service functions, yet considerably less has been reported of the use of ABC to support cost management in this sector. In Spain, cost systems are essential for city councils as they are obliged to calculate the cost of the services subject to taxation (eg. waste collection, etc). City councils must have a cost system in place to calculate the cost of services, as they are legally required not to ‘profit’, from these services. This paper examines the development of systems to support cost management in the Spanish Public Sector. Through semi-structured interviews with 28 subjects within one City Council it contains a case study of cost management. The paper contains extracts from interviews and a number of factors are identified which contribute to the successful development of the cost management system. Following the case study a number of other City Councils were identified where activity-based techniques had either failed or stalled. Based on the factors identified in the single case study a further enquiry is reported. The paper includes a summary using statistical analysis which draws attention to change management, funding and political incentives as factors which had an influence on system success or failure. |
| Keywords: | Cost system, management accounting, activity based costing, public sector |
| JEL: | M41 M49 |
| URL: | http://d.repec.org/n?u=RePEc:upf:upfgen:964&r=acc |
| By: | Bruno S. Frey |
| Abstract: | “Evaluitis” - i.e. ex post assessments of organizations and persons - has become a rapidly spreading disease. In addition to the well-known costs imposed on evaluees and evaluators, additional significant costs are commonly disregarded: incentives are distorted, ossification is induced and the decision approach is wrongly conceived. As a result, evaluations are used too often and too intensively. A viable and often superior alternative to evaluations is a careful selection of persons and afterwards leaving them to pursue their assigned tasks. |
| Keywords: | Evaluation; Performance; Selection; Research; Incentives |
| JEL: | D23 D61 H43 M40 M5 |
| Date: | 2006–05 |
| URL: | http://d.repec.org/n?u=RePEc:cra:wpaper:2006-18&r=acc |