nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2007‒02‒24
five papers chosen by
Alexander Harin
Modern University for the Humanities

  1. Recent developments of statistical approaches in cost accounting: a review By Rodney C Wolff; Michael Falta
  2. "The Balance Sheet Approach to Financial Crises in Emerging Markets" By Jan Toporowski; Giovanni Cozzi
  3. The Significance and Composition of Deferred Tax Assets and Liabilities By James Poterba; Nirupama Rao; Jeri Seidman
  4. The Production and Consumption Accounting Principles as a Guideline for Designing Environmental Tax Policy By Mònica Serrano
  5. The Brazilian ’Tax War’: The Case of Value-Added Tax Competition Among the states By Luiz de Mello

  1. By: Rodney C Wolff; Michael Falta (School of Economics and Finance, Queensland University of Technology)
    Abstract: We review and simultaneously introduce a convenient statistical concept for the mathematical representation of the Statistical Activity Cost Theory (SACT) introduced by Willett (1987 and 1988). Further, we discuss, and present a critique of, a variety of statistical models with respect to long debated accounting problems, such as the allocation of joint costs and depreciation. We finally propose that taking the effort to combine those models results in a novel statistical accounting system and this is discussed by means of the so-called virtual firm. As it has been shown that any statistical model discussed here outperforms associated deterministic counterparts, this review presents promising outcomes and useful perspectives for the accounting profession.
    Keywords: Accounting systems; conditioning; depreciation; Markov chains; Statistical Activity Cost Theory (SACT); virtual firm
    Date: 2006–06–15
  2. By: Jan Toporowski; Giovanni Cozzi
    Abstract: This paper contrasts the conventional balance sheet approach to the analysis of economic disturbances in emerging markets with the alternative balance sheet approach that applies and extends Minsky's Financial Instability Hypothesis to (open) emerging market economies. Earlier balance sheet studies are found to be flawed because of a failure to disaggregate firms' balance sheets. Examination of such balance sheets in Thailand, Malaysia, Indonesia, Singapore, and Hong Kong suggests that firms in the three crisis countries did share common causes of financial fragility, but that the level of financial development and the particular domestic economic and political situation also affected their situation.
    Date: 2006–12
  3. By: James Poterba; Nirupama Rao; Jeri Seidman
    Abstract: This paper investigates the importance of deferred tax assets and liabilities for a sample of large U.S. corporations between 1993 and 2004 and documents substantial heterogeneity in the deferred tax positions of different firms. In 2004, 25 firms in a sample of 73 reported net deferred tax assets and 48 reported net deferred tax liabilities. Firms differ substantially in the composition of their deferred tax assets and liabilities. The largest components of deferred tax assets for sample firms are Loss and Credit Carryforwards and Employment and Post-employment Benefits. The largest components of deferred tax liabilities are Property, Plant & Equipment and Leases. Total deferred tax assets for sample firms with net deferred tax assets in 2004 were $61.9 billion, while total deferred tax liabilities for sample firms with net deferred tax liabilities were $223.8 billion. A five percentage point decline in the federal statutory corporate tax rate could reduce net income at sample firms with net deferred tax assets by as much as $8.8 billion, since a statutory rate cut would reduce the value of deferred tax assets and this change would be reflected on the income statement. We use data on the sales, market value, and assets of sample firms, relative to aggregate data for the U.S. corporate sector, to estimate the aggregate value of deferred tax assets and liabilities.
    JEL: H25 M41
    Date: 2007–02
  4. By: Mònica Serrano (Universitat de Barcelona)
    Abstract: This paper evaluates two alternative tax policies aimed at reducing atmospheric pollutant emissions. One based upon an environmental tax that burdens directly firms’ emissions, and the other one that burdens both directly and indirectly household consumption’s emissions. Applying input-output approach, we reallocate the emissions generated in the economy according to the responsibility definition, i.e. the production or the consumption accounting principle. Afterwards, we analyse the effects on the products’ prices of implementing an ad-quantum environmental tax based on the Producer Pays Principle (PPP) and/or on the User Pays Principle (UPP). The results obtained, show that both PPP and UPP environmental tax have the same effect on the final products’ prices. However, the price of the intermediate products is only affected by the PPP environmental tax, whereas the UPP environmental tax keeps the prices unchanged.
    Keywords: Input-Output Analysis, Environmental Taxes, Atmospheric Pollutants
    JEL: C67 H23 Q53
    Date: 2007–01
  5. By: Luiz de Mello
    Abstract: This paper tests for horizontal tax competition in the VAT for a sample of Brazilian states in the period 1985-2001. The states have considerable autonomy to set their VAT rates and bases, often using this tax as an industrial policy tool. The empirical findings, based on the estimation of a tax reaction function in an error-correction set-up, confirm the hypothesis of horizontal tax competition: the states react strongly to changes in their neighbours? VAT code, especially those that belong to the same geo-economic region. Also, there appears to be a Stackelberg leader among the states, with the remaining jurisdictions responding strongly to its policy moves. There is no co-occupancy of tax bases between different levels of government and hence limited scope for vertical externalities in tax setting. But the fact that the federal government shares with the states part of the revenue of its more elastic taxes, such as the income tax, appears to affect the opportunity cost of horizontal tax competition. <P>La "guerre fiscale" au Brésil : La concurrence des états sur la taxe sur la valeur ajoutée <BR>Ce document présente une analyse empirique de la concurrence horizontale sur la taxe sur la valeur ajoutée (TVA) parmi les états du Brésil durant la période 1985-2001. Les états brésiliens ont une autonomie considérable en matière de politique fiscale pour établir le taux d’imposition et l’assiette de leur TVA. Ils se servent souvent de cet impôt comme instrument de politique industrielle. Les résultats de l’analyse empirique basée sur l’estimation d’une fonction de réaction fiscale avec un mécanisme de correction d’erreur confirme l’hypothèse de concurrence horizontale parmi les états: ils réagissent fortement aux changements des taux d’imposition de la TVA de leurs voisins, surtout ceux qui appartiennent à la même région géo-économique. Par ailleurs, il y a un leader Stackelberg parmi les états, puisque les autres administrations réagissent fortement à sa politique fiscale. Les différents niveaux d’administration ne partagent pas les mêmes assiettes de sorte que les externalités verticales associées à la politique fiscale sont assez limitée au Brésil. Néanmoins, le fait que l’administration fédérale partage avec les états une part importante des recettes de ses impôts plus élastiques, tel que l’impôt sur le revenu, affecte le coût d’opportunité de la concurrence horizontale parmi les états en terme de politique fiscale.
    JEL: H2 H7
    Date: 2007–02–14

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