nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2007‒03‒24
five papers chosen by
Alexander Harin
Modern University for the Humanities

  1. New ways of accountancy By PAUNIĆ, ALIDA
  2. Sanctions, Now or Later? The Optimal use of Warnings in Law Enforcement By roberto galbiati
  3. VAT Fraud and Evasion: What Do We Know, and What Can be Done? By Stephen C. Smith; Michael Keen
  4. Asset Prices in the Presence of a Tax Authority By Marc Rapp; Bernhard Schwetzler
  5. Capital Structure and International Debt Shifting By Luc Laeven; Gaetan Nicodeme; Harry Huizinga

    Abstract: The problems that are seeing by paper is to examine to what extent accounting reports can provide us with the true picture of company performance and finds the way how to broaden accounting reports in order to incorporate other relevant information (News in TV, newspapers, education, moral standards, goal achievements, position on the market, a life cycle period, computer literacy, future investment plans and possible mergers, a questions, women position etc.). It is a task of this work to examine is such an accountancy possible based on the cases of published company reports .
    Keywords: accounting general; creative accountancy; IFRS; social responsibility; accounting methods; IFRS; GAAP; new ways
    JEL: M4 M21 M40
    Date: 2006–03–01
  2. By: roberto galbiati
    Abstract: Despite strict penalties may be available in order to prosecute violators, regulators frequently just issue a warning of some kind, and if violators move into compliance they do net release any penalty. Example of this practice may be found in several countries and for several different situations, the most common regard traffic law, environmental regulation and financial crimes. This paper defines the optimal sanctioning strategy for an enforcer that minimizes the social cost of violations and can determine the auditing probability and whether to sanction violators immediately or issue a warning and sanctioning only repeat offenders. We show that it may be desirable to procrastinate the sanctions by issuing a warning to the violators and sanction only those who result to be guilty at a second audit. Furthermore, we show that when the potential wrongdoers are uncertain about the auditing parameters the optimal probability of auditing is higher than in the case there is not such an uncertainty. The optimality of issuing a warning is related to the optimal monitoring probability.
    Keywords: law enforcement, monitoring probability, regulation, warnings,
    JEL: K4 D6
  3. By: Stephen C. Smith; Michael Keen
    Abstract: Like any tax, the VAT is vulnerable to evasion and fraud. But its credit and refund mechanism does offer unique opportunities for abuse, and this has recently become an urgent concern in the European Union (EU). This paper describes the main forms of noncompliance distinctive to a VAT, considers how they can be addressed, and assesses evidence on their extent in high-income countries. While the practical significance of current difficulties in the EU should not be over-stated, administrative measures alone may prove insufficient to deal with them, and a fundamental redesign of the VAT treatment of intra-community trade required. The current difficulties in the EU largely reflect circumstances that would not apply in the United States.
    Keywords: Value-added tax , sales tax , enforcement , compliance , non-compliance , audit , Value added tax , Europe , Sales taxes , Tax evasion ,
    Date: 2007–02–15
  4. By: Marc Rapp (Leipzig Graduate School of Management (HHL)); Bernhard Schwetzler (Leipzig Graduate School of Management (HHL))
    Abstract: This paper examines the equilibrium effect of a shift in the capital income tax rate upon state prices, risk-neutral probabilities, and corresponding security prices in a single-period binomial model economy with an exogenous risk-free rate. The policy design under consideration consists of a simple linear tax code that applies the economic rent as a tax base. It is shown that if tax proceeds are transferred to outsiders, a shift in the tax rate affects state prices, risk-neutral probabilities as well as equilibrium security prices. Thereby, the effect for the equilibrium price of a security is sensitive with respect to the correlation between its own payoff and the payoff of the market portfolio. If in contrast tax proceeds are redistributed within the cohort of market participants, risk-neutral probabilities, and security prices are unaffected by a change in the tax rate, although state prices are sensitive with respect to the tax rate.
    Keywords: Equilibrium security prices, capital income tax, risk-neutral probability measure,
    JEL: D50 G12 G31
  5. By: Luc Laeven; Gaetan Nicodeme; Harry Huizinga
    Abstract: This paper presents a model of a multinational firm's optimal debt policy that incorporates international taxation factors. The model yields the prediction that a multinational firm's indebtedness in a country depends on a weighted average of national tax rates and differences between national and foreign tax rates. These differences matter because multinationals have an incentive to shift debt to high-tax countries. The predictions of the model are tested using a novel firm-level dataset for European multinationals and their subsidiaries, combined with newly collected data on the international tax treatment of dividend and interest streams. Our empirical results show that corporate debt policy indeed not only reflects domestic corporate tax rates but also differences in international tax systems. These findings contribute to our understanding of how corporate debt policy is set in an international context.
    Keywords: Corporate taxation , financial structure , debt shifting , Debt , Tax rates , Tax policy , Capital , Economic models ,
    Date: 2007–02–26

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