nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2008‒04‒12
five papers chosen by
Alexander Harin
Modern University for the Humanities

  1. Measuring reseach outputs across borders-a comment By Mottis, Nicolas; Walton, Peter
  2. Rethinking Public Auditing Institutions: Empirical Evidence from Swiss Municipalities By Mark Schelker; Reiner Eichenberger
  3. Auditors and Corporate Governance: Evidence from the Public Sector By Mark Schelker
  4. Public Auditors: Empirical Evidence from the US States By Mark Schelker
  5. Fiscal competition between decentralized jurisdictions, theoretical and empirical evidence By Clément Carbonnier

  1. By: Mottis, Nicolas (ESSEC Business School); Walton, Peter (ESSEC Business School)
    Abstract: This papers starts from an article published by Chan et al. in Accounting and Business Research in 2006 on accounting research in Europe. It develops the idea that accounting research in Europe is much more diversified than it appears, is not limited to British academics output, and relies upon very diversified vectors (journals or books) across countries. The case of France and Germany are particularly highlighted. More generally, the addresses the question of research evaluation and its consequences on academic communities.
    Keywords: Accounting; Control; Research; Europe
    JEL: I23 M40
    Date: 2008–03
  2. By: Mark Schelker; Reiner Eichenberger
    Abstract: In the economic literature various political institutions designed to control the government have been analyzed. However, an important institution has been neglected so far: independent auditing institutions with an extended mandate to analyze the budget draft and individual policy proposals. We argue that auditors with an extended mandate improve transparency and provide essential information on the impact of policy proposals on common pool resources. This leads to less wasteful spending and a more efficient allocation of public resources. We empirically analyze the policy impact of local auditors with an extended audit mandate in Switzerland. Auditors, who can evaluate and criticize policy proposals ex ante to policy decisions, significantly reduce the general tax burden and public expenditures. We find similar results with different datasets. These results are robust to various changes in the econometric specification.
    Keywords: auditor; audit court; special interests; political economics; public finance
    JEL: D70 H10
    Date: 2008–03
  3. By: Mark Schelker
    Abstract: Corporate auditors review and evaluate financial statements. To enhance independence the selection process and mandatory auditor rotation requirements have been debated intensively. The available empirical evidence is not conclusive and suffers from serious endogeneity problems. We propose learning from the public sector in which auditors play a similar role and present empirical evidence on the impact of auditor term length and rotation requirements on government performance at the US State level. We find evidence indicating that relatively short as well as extended auditor terms have a negative, and rotation requirements have a positive effect on state credit ratings.
    Keywords: corporate governance; auditor; mandatory auditor rotation; public auditor
    JEL: G30 G34 M42
    Date: 2008–03
  4. By: Mark Schelker
    Abstract: Public auditors should reduce agency problems and improve transparency. We address the question of whether auditors should be elected by the citizens or appointed by either the legislature or the executive, and explore the influence of conducting performance audits. We construct a unique dataset at the US State level capturing differences in the institutional design of state auditing institutions. We estimate the influence of auditor characteristics on different outcome variables reflecting government performance and implement an alternative identification strategy relying on citizens’ electoral decisions. We examine whether citizens use divided government – a costly mechanism to control the government – as a substitute, when other effective, but less costly mechanisms are not available. Even if the empirical results are sometimes difficult to interpret, we generally find that (1) performance audits tend to be beneficial and (2) elected auditors with a strong mandate to conduct performance audits seem to outperform other institutional arrangements.
    Keywords: Public auditors; audit courts; political institutions; political economics
    JEL: D70 H10
    Date: 2008–03
  5. By: Clément Carbonnier (THEMA - Université de Cergy-Pontoise, 33 boulevard du port, F 95011 Cergy-Pontoise cedex, France)
    Abstract: This article provides theoretical and empirical evidence that local fiscal competition generates a bias toward low business tax rates. Furthermore, it is shown that this bias is stronger for smaller jurisdictions. First, a theoretical model is settled with private and public capital and a fixed factor. The fixed factor allows to consider differences between the jurisdictions. The results show that there exists a bias toward low tax rates due to tax competition. This bias generates an underprovision of public capital, and therefore production is smaller with tax competition than with cooperation. Moreover, the bias toward low tax rates is stronger for jurisdictions with less fixed factor. That means that tax competition generates a larger production decrease for smaller jurisdictions. The empirical part aims at estimating the bias toward low tax rates and its dependency with respect to the fixed factor. Panel regressions with temporal and individual fixed effects of the tax rates are implemented with French local data, using the creation of intercity communities. The results indicate that the bias toward low local tax rates is strong: up to 23% decrease for the smaller cities. It is also significantly decreasing with respect to the city size: there is no tax rate decrease due to tax competition for the biggest cities.
    Keywords: Optimal taxation; Business taxes ; Tax competition ; Public capital; Firm location.
    JEL: H21 H25 H73 R12 R30
    Date: 2008

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