nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2007‒08‒14
four papers chosen by
Alexander Harin
Modern University for the Humanities

  1. Estimates of the Magnitude of Financial and Tax Reporting Conflicts By George A. Plesko
  2. The Effect of Legal Systems and Accounting Conservatism on Corporate Governance: The U.S. versus the U.K.(A Comparative Analysis) By Narayanan, Supreena
  3. On Policy Relevance of Ramsey Tax Rules By Selim, Sheikh
  4. Approche expérimentale de l'incidence de la fiscalité sur l'offre de travail : Une étude comparative des systèmes d'imposition By David Masclet; Claude Montmarquette

  1. By: George A. Plesko
    Abstract: This study examines the tax reporting consequences of financial reporting discretion. Using a matched sample of financial statements with tax returns, I provide estimates of the accuracy of tax return information inferred from financial statements. To examine the tradeoffs between financial and tax reporting, I model the relation discretionary financial accounting accruals have to discretionary federal tax accruals. The methodology takes advantage of the contemporaneous nature of reporting to mitigate econometric problems identified in previous research. I find the extent tax reporting reflects discretionary financial reporting varies dramatically by industry, profitability, and the sign of discretionary accruals. I also find managers are able to undertake tax reducing activities with less of an effect on financial reporting than tax increasing accruals, consistent with recent evidence on the differential growth of book and tax income, and with tax avoidance activities.
    JEL: C50 H25 M41
    Date: 2007–08
  2. By: Narayanan, Supreena
    Abstract: Corporate Governance deals with the ways in which suppliers of finance to corporations assure themselves of getting a return on their investments. This paper analyses the effects of legal systems and accounting conservatism on corporate governance. The U.K. and American corporate governance perspective, there have fundamentally been the same goals with respect to strengthening corporate governance In comparison to the U.S vs the U.K., the value of independent directors is emphasized in the recommendations of Derek Higgs regarding corporate governance, building on the earlier work of the Cadbury Commission. In the U.S. it is the responsibility of the States and the stock exchanges to determine their corporate governance requirements. In the U.K. it is the responsibility of the Security Exchange Commission to overlook adherence to corporate governance regulations whereas its is the duty of the Sarbanes Oxley act to overlook the corporate governance rules and regulations. Theory indicates that accounting conservatism is important to establish an efficient corporate governance system in both the U.S and the UK
    Keywords: Corporate Governance; Legal Systems; Accouting Conservatism
    JEL: F3
    Date: 2006–02–19
  3. By: Selim, Sheikh
    Abstract: The Ramsey approach to optimal taxation and Ramsey tax rules have amassed substance in economic theory. However, they are often criticized on grounds of practicality, fairness, feasibility and some other aspects of designing actual tax policy. This paper presents a collection of these views; it discusses how closely or remotely Ramsey rules are followed in designing tax policy. It presents some recent tax reforms in the US and in the UK that have closely, if not completely, followed the principle of distortion minimization. Despite the widely speculated difficulty associated with mapping normative tax rules into positive policy design, it is possible to implement taxes that have strong correspondence to Ramsey tax formulas. This paper also discusses why some implemented tax rules lack consistency with Ramsey principles, or why it is often difficult to establish correspondence between some implemented taxes and Ramsey tax rules.
    Keywords: Optimal Taxation, Policy Relevance, Ramsey Tax Rules
    JEL: E61 E62 H21 H30
    Date: 2007
  4. By: David Masclet; Claude Montmarquette
    Abstract: This experiment evaluates various systems of taxation on the number of real tasks performed by participants and in terms of fiscal income generated to help government in its redistributive goal. The first treatment concerns a proportional system of taxation. The second treatment considers an equivalent progressive income tax system. Finally, participants are submitted sequentially to different flat tax rates. This last treatment evaluates the reaction of participants to fiscal changes. Our results support clearly that a progressive taxation system reduces work effort relative to a single flat tax. The single flat tax system yields more fiscal income. The results also show that individuals are affected by their own tax system and by the other forms of taxation they experienced before <P>L'enjeu de cet article est de savoir si l'incidence fiscale sur l'offre de travail et sur les rentrées fiscales est identique selon le système d'imposition en vigueur. Ainsi, un système progressif décourage-t-il davantage l'offre de travail qu'un système proportionnel ? Quel système de taxation permet à l'état de remplir au mieux son rôle redistributif ? Afin de répondre à ces questions, l'approche mobilisée est l'économie expérimentale. Trois traitements ont été réalisés. Dans un premier traitement, les participants doivent réaliser un effort réel sous un système d'imposition proportionnel. Dans un second traitement, le système d'imposition en vigueur est un système progressif équivalent. Enfin dans un troisième traitement, les participants sont confrontés successivement à plusieurs systèmes d'imposition. Ce dernier traitement permet d'étudier l'incidence de changement de système sur les décisions individuelles. Nos résultats expérimentaux montrent que les effets désincitatifs sur l'offre de travail sont plus importants sous un système progressif que sous un système proportionnel sans contexte. De plus le systèms proportionnel sans contexte permet des rentrées fiscales plus importantes. Enfin, un autre résultat intéressant de notre étude est que les individus ne sont pas uniquement influencés par leur propre système fiscal mais également par leurs expériences fiscales précédentes.
    Keywords: fiscal systems, work effort, fiscal income, experimental study, systèmes fiscaux, offre de travail et recettes fiscales, étude expérimentale
    JEL: C91 H30 J22
    Date: 2007–07–01

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