nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2007‒08‒08
five papers chosen by
Alexander Harin
Modern University for the Humanities

  2. The Optimal Capital Structure of Banks: Balancing Deposit Insurance, Capital Requirements and Tax-Advantaged Debt By John P. Harding; Xiaozhing Liang; Stephen L. Ross
  3. Les difficultés d’exécution des contrats de Private Finance Initiative britanniques By Frédéric Marty; Arnaud Voisin
  4. Distributional Implications of the VAT Reform in the Philippines By Daria Zakharova; David Locke Newhouse
  5. The Dutch fiscal framework; history, current practice and the role of the CPB By Frits Bos

  1. By: F. Javier Sánchez Vidal (Universidad Politécnica de Cartagena)
    Abstract: Inferences about the coefficient values of a model estimated with a linear regression cannot be made when both the dependent and the independent variable are part of an accounting (semi) identity. The coefficients will no longer indicate a causal relation as they must adapt to satisfy the identity. A good example is an investment-cash flow sensitivity model. Este trabajo habla de la imposibilidad de extraer conclusiones sobre el valor de los coeficientes de un modelo de regresión lineal que intenta estimar una relación causal, cuando tanto la variable dependiente como la variable independiente forman parte de una (semi) identidad contable. Los coeficientes no sirven para explicar la relación causal, ya que su valor se adaptará para cumplir la identidad. Como ejemplo ilustrativo se presenta el modelo de la sensibilidad de la inversión al cash-flow.
    Keywords: Sensibilidad de la inversión al cash flow, identidades contables, semi-identidades contables Investment-cash flow sensitivities, Accounting identities, Accounting semi-identities
    JEL: G32 B4
    Date: 2007–07
  2. By: John P. Harding (University of Connecticut); Xiaozhing Liang (State Street Corporation); Stephen L. Ross (University of Connecticut)
    Abstract: The capital structure and regulation of financial intermediaries is an important topic for practitioners, regulators and academic researchers. In general, theory predicts that firms choose their capital structures by balancing the benefits of debt (e.g., tax and agency benefits) against its costs (e.g., bankruptcy costs). This paper studies the impact and interaction of deposit insurance, capital requirements and tax benefits on a bank's choice of optimal capital structure. Using a contingent claims model to value the firm and its associated claims, we find that there exists an interior optimal capital ratio in the presence of deposit insurance, taxes and a minimum fixed capital standard as long as there is a significant financial burden associated with violating capital requirements. Banks voluntarily choose to maintain capital in excess of the minimum required in order to balance the risks of insolvency (especially to future tax benefits) against the benefits of additional debt. Because our model includes all three contingent claims, our results differ from those of previous studies of the capital structure of banks that have generally found corner solutions (all equity or all debt) to the capital structure problem.
    Date: 2007–07
  3. By: Frédéric Marty (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - [CNRS : UMR6227] - [Université de Nice Sophia-Antipolis], OFCE - OBSERVATOIRE FRANCAIS DES CONJONCTURES ECONOMIQUES - [Institut d'Etudes Politiques de Paris]); Arnaud Voisin (CRIFP - centre de recherche en ingénierie financière et en finances publiques - [Université de Nice Sophia-Antipolis])
    Abstract: Alors que de nombreux travaux se sont penchés sur l’optimalité du recours aux partenariats public-privé ou sur les enjeux posés par la structure d’attribution des risques entre les parties, les difficultés d’exécution des contrats de partenariats public-privé n’ont fait jusqu’à présent l’objet que de rares analyses. Les principaux travaux développés sur les difficultés d’exécution des contrats de partenariat public-privé portent sur le cas des pays en développement et concluent sur les difficultés découlant du cadre régulatoire public, que celles-ci proviennent des défaillances de la partie publique elle-même ou des comportements stratégiques des contractants privés cherchant à tirer profit de ces dernières. De tels travaux présentent cependant deux limites. Tout d’abord, ils portent sur des partenariats conçus au sens de la Banque Mondiale, c’est-à-dire lato sensu, intégrant toutes les modalités de gestion déléguée, privatisation incluse. Ensuite, ces travaux ne permettent pas de jauger des risques intrinsèques attachés à l’exécution des contrats, quelles que soient les « performances » du cadre juridique. A ce titre, il peut être fructueux, dans une optique comparative, de développer quelques études de cas à partir des évaluations menées par la Cour des Comptes britannique, le National Audit Office. En effet, si jusqu’à présent les analyses menées sur les PFI britanniques se sont surtout concentrées sur la phase d’acquisition, avec notamment des évaluations de la Value for Money attachée aux contrats, de l’optimalité de la répartition contractuelle des risques ou des arbitrages comptables sous-jacents, les analyses portant sur l’exécution des contrats demeuraient l’exception. Toutefois l’évaluation de la performance opérationnelle des PFI, réalisée en mars 2006 par Partnerships UK, montre que 450 opérations sur 700 étaient déjà rentrées en phase opérationnelle en 2005, rendant possible une analyse des modes de traitement des difficultés d’exécution de ces contrats. Il s’agit tout d’abord, de tirer profit d’un retour d’expérience de vingt années (si l’on prend en compte le contrat relatif au Pont Elisabeth II, PFI avant la lettre) et d’observer en suite les modalités de traitement des défaillances contractuelles dans un cadre juridique dans lequel la solution contentieuse demeure plus l’exception que la règle.
    Keywords: Partenariat public privé, contrats incomplets, contrats incitatifs, économie du droit
    Date: 2007–07–19
  4. By: Daria Zakharova; David Locke Newhouse
    Abstract: This paper assesses the distributional impact of the recent VAT reform in the Philippines and evaluates alternative methods to mitigate the effects of the reform on poor households. The reform was progressive and relatively well targeted. To alleviate the impact of the reform on the poor, several mitigating measures were introduced. Although these measures reduced the adverse impact of the VAT reform for all households, a sizable amount of the benefit accrued to high-income households. Targeted transfer schemes have the potential to deliver a much higher percentage of benefits to the poor.
    Date: 2007–07–12
  5. By: Frits Bos
    Abstract: According to the IMF and OECD, the Dutch fiscal framework is rather unique, and its design and implementation are highly recommendable. This paper describes this framework, its role in managing Dutch public expenditure, its history since 1814, the most recent national discussions and the role of the CPB. Major features of the Dutch fiscal framework are the trend-based fiscal framework with real net expenditure ceilings for the whole term of government, the role of independent organisations, like the CPB, Statistics Netherlands and the Netherlands Court of Audit, and the intermediary role of the national advisory group on budgetary principles. The framework reflects a long learning process, e.g. how to reconcile sound public finance, political pressures and the detailed requirements for managing public expenditure. There was not only progress, but also regression (e.g. the budgetary process became hectic and short-sighted in the seventies and early eighties) and old ideas becoming relevant again, e.g. taxes should be low and stable, each generation should bear its own burden and the reintroduction of cost-benefit analysis in public decision-making.
    Keywords: National fiscal rules and institutions; CPB, Advisory group on budgetary principles; Dutch fiscal framework; history of Dutch public finance since 1814; public expenditure; budgetary policy; expenditure ceilings; independent fiscal council; Drees jr; Duisenberg; Lieftinck; Pierson; Tinbergen; Zalm; Zijlstra
    JEL: B1 B2 H5 H6 N44
    Date: 2007–07

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