nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2008‒03‒15
seven papers chosen by
Alexander Harin
Modern University for the Humanities

  1. Environmental accounting and reporting With special reference to India By Pramanik, Alok Kumar; Shil, Nikhil Chandra; Das, Bhagaban
  2. Empirical Assessment of the Existence of Taxable Agglomeration Rents By Souleymane COULIBALY
  3. Fiscal Equalisation among the states in Germany By Jan Werner
  4. Decomposition of external capital inflows and outflows in the small open transition economy (The case analysis of the Slovak republic) By Mirdala, Rajmund
  5. The Evolution of Tax Morale in Modern Spain By Jorge Martinez-Vazquez; Benno Torgler
  6. There exists circularity between WACC and value? Another solution By Ignacio Velez-Pareja; Julian Benavides Franco
  7. Life cycle costing: an alternative selection tool By Shil, Nikhil Chandra; Parvez, Mahbub

  1. By: Pramanik, Alok Kumar; Shil, Nikhil Chandra; Das, Bhagaban
    Abstract: In recent years, environmental pollution becomes so acute and the stakeholders’ awareness to the issue becomes so serious that environmental accounting has become a strong branch of accounting. Still, attention towards the style and recognition of environmental accounting is not a generalized one. Legal authorities, standard setting bodies and other regulators cannot come to a consensus regarding the conceptual framework of environmental accounting and its disclosure. Thus, such disclosure is not mandatory rather voluntary that has no specific style or format. With the passage of time, more guidelines are coming in customized format that may lead us to reach a common format for recognizing environment related data and disclosure thereof through financial statements. Still, such disclosure is guided by the social responsibility and commitment on the part of the entities that work as strong agents for polluting the environment. In this paper, the theoretical foundation of environmental accounting and reporting is discussed with special reference to India. More emphasis is given on environmental accounting and awareness for that as this is supposed to be the need of today.
    Keywords: Environmental Accounting, Environmental Accounting and Reporting, Green Accounts.
    JEL: Q56
    Date: 2007–12–31
  2. By: Souleymane COULIBALY
    Abstract: The New Economic Geography literature claims that firms are ready to pay more tax in "big markets" because of agglomeration rents. Tax authorities can thus set higher tax rates in denser economic area, hence an opposite mechanism to the "race to the bottom" process described by the classical tax competition theory. The aim of this paper is to empirically assess the existence of such agglomeration rents. We use Swiss data on municipalities corporate income tax rates and firms location to test the tax gap between these municipalities and the most peripheral one using a theory-based relation. Our estimations indicate that municipalities with higher agglomeration rents (measured as the number of firms plus the "potential of neighboring firms") are setting higher corporate income tax rates, hence confirming the existence of taxable agglomeration rents.
    Keywords: agglomeration rents; tax competition; potential of neighboring firms
    JEL: C4 H2 R12
    Date: 2008–01
  3. By: Jan Werner (Institute of Local Public Finance)
    Abstract: Germany's fiscal federalism has undergone a process of perpetual reform. On the one hand, some tax sources that have existed up to now – the corporate income tax is a good example in this context – will shortly be phased out because of changes in the system. On the other hand the judgement by the Constitutional Court has required a renewal of Germany's equalisation system. Besides an illustration of tax sharing between the three tiers of government, the main part of this paper deals with the equalisation among the 16 federal states. In the framework of the reforming process of the "Solidarity Pact IIW, the distribution of tax revenues, vertical grants and fiscal equalisation among the federal states were newly arranged.
    Keywords: Fiscal Federalism, Grants, Fiscal Autonomy, Germany
    JEL: H7 H2 H1
    Date: 2008–01
  4. By: Mirdala, Rajmund
    Abstract: The main objective of the proceeding is to perform a logical decomposition of the structure of external capital inflows and outflows in the Slovak republic in order to analyze the main trends in the external financial integration and its development through the period of 1994-2006. In order to fulfill our objective we observe the changes in the structure of external financial assets and liabilities in order to provide the explanation of main trends in the external capital portfolio of the Slovak republic. Finally, we explore the implications of the accumulated stock of external capital for future trade and current account balances.
    Keywords: financial integration; external capital structure; foreign financial assets; foreign financial liabilities; transition economies
    JEL: F15 F41 F36
    Date: 2007–11
  5. By: Jorge Martinez-Vazquez; Benno Torgler
    Abstract: This paper studies the evolution of tax morale in Spain in the post-Franco era. In contrast to the previous tax compliance literature, the current paper investigates tax morale as the dependent variable and attempts to answer what actually shapes tax morale. The analysis uses survey data from two sources: the World Values Survey and the European Values Survey, allowing us to observe tax morale in Spain for the years 1981, 1990, 1995, and 1999/2000. The study of the evolution of tax morale in Spain over nearly a 20-year span is particularly interesting because the political and fiscal system evolved very rapidly during that period.
    Keywords: Spain, Tax morale, Tax compliance, Constitutional and political changes, fiscal system, endogenous preferences
    JEL: H26 H73 K42 O17 Z13
    Date: 2007–11
  6. By: Ignacio Velez-Pareja; Julian Benavides Franco
    Abstract: Although we know there exists a simple approach to solve the circularity between value and the discount rate, known as the Adjusted Present Value proposed by Myers, 1974, it seems that practitioners still rely on the traditional Weighted Average Cost of Capital, WACC approach of weighting the cost of debt, Kd and the cost of equity, Ke and discounting the Free Cash Flow, FCF. We show how to solve circularity when calculating value with the free cash flow, FCF and the WACC. As a result of the solution we arrive at a known solution when we assume the discount rate of the tax savings as Ke, the cost of unlevered equity: the capital cash flow, CCF discounted at Ku. When assuming Kd as the discount rate for the tax savings, we find an expression for calculating value that does not implies circularity. We do this for a single period and for N periods.
    Date: 2008–03–06
  7. By: Shil, Nikhil Chandra; Parvez, Mahbub
    Abstract: In today’s complex business environment, both raising and application of fund becomes so costly. Thus, business needs to take a wise decision of investing funds in fixed facilities, which at one side consumes a lot of costly fund and on the other, set the value of the business. Net present value (NPV), pay back period (PBP), internal rate of return (IRR) are some widely used and customary tools in such situation most of which are based on projected revenues. In this paper, we have tried to use life cycle costing as a strong alternative, which considers every cost category throughout the life of the assets, from cradle to grave, to represent the effective use of funds in its totality. The theoretical foundation of LCC as a tool comes from literature review but the application of LCC in alternative choosing areas are the development of the authors. The use of mathematical tools and equations is an exemplary one that may be changed or modified to fit it with the typical context, if necessary. The paper can be a guideline which finally concludes that the use of life cycle costing as an alternative selection tool results a better cost structure analysis than others.
    Keywords: Cost Breakdown Structure (CBS); Invisible Costs; Iceberg Effect; Affinity Diagram
    JEL: M4
    Date: 2007–06–30

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