nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2008‒08‒14
five papers chosen by
Alexander Harin
Modern University for the Humanities

  1. The transition to IFRS: disclosures by Portuguese listed companies By Patricia Teixeira Lopes; Rui Couto Viana
  2. Corporate Taxes and the Location of Intangible Assets Within Multinational Firms By Dischinger, Matthias; Riedel, Nadine
  3. Reforming the Polish Tax System to Improve its Efficiency By Alain de Serres
  4. Empirical Capital Structure Research: New Ideas, Recent Evidence, and Methodological Issues By Elsas, Ralf; Florysiak, David
  5. Tax Competition, Imperfect Capital Mobility and the gain from non-preferential agreements By Kaushal Kishore

  1. By: Patricia Teixeira Lopes (University of Porto, Faculty of Economics); Rui Couto Viana (University of Porto, Faculty of Economics)
    Abstract: In the context of the CESR and of the Portuguese market regulator recommendations regarding the disclosure of the impacts of the transition to IFRS, this paper analyses the content of those disclosures by Portuguese listed companies. We found a high degree of variability among the disclosure either regarding the qualitative (narrative explanations of transition) or quantitative (reconciliations) disclosures. The results show that the objective of comparability, relevance and understandability stated in CESR’s recommendation were not achieved. Regarding accounting changes, the analysis shows that the reported impacts by companies confirmed expectations based on prior de jure studies on major impacts of changing from Portuguese GAAP to IFRS; these major impacts regard the recognition of intangibles, the accounting treatment of goodwill and financial instruments. Finally, Gray’s (1980) “conservatism” index was computed using the reconciliated profits to IFRS reported by companies. This analysis shows that Portuguese standards are more conservative than IFRS. This study is relevant to several parties: to the market regulators and policy makers in predicting the level of compliance with IFRS and calling attention for the importance of enforcement mechanisms; to the preparers, auditors and users in identifying the most problematic areas of implementation of IFRS.
    Keywords: International Accounting, Disclosure, IAS/IFRS, Portugal
    JEL: M41
    Date: 2008–08
  2. By: Dischinger, Matthias; Riedel, Nadine
    Abstract: Intangible assets, like patents and trademarks, are increasingly seen as the key to competitive success and as the drivers of corporate profit. Moreover, they constitute a major source of profit shifting opportunities in multinational enterprises (MNEs) due to a highly intransparent transfer pricing process. This paper argues that for both reasons, MNEs have an incentive to locate intangible property at affiliates with a relatively low corporate tax rate. Using panel data on European MNEs and controlling for unobserved time--constant heterogeneity between affiliates, we find that the lower a subsidiary's tax rate relative to other affiliates of the multinational group the higher is its level of intangible asset investment. This effect is statistically and economically significant, even after controlling for subsidiary size and accounting for a dynamic intangible investment pattern.
    Keywords: multinational enterprise; intangible assets; tax planning; micro level data
    JEL: H25 F23 H26 C33
    Date: 2008–07–28
  3. By: Alain de Serres
    Abstract: The Polish tax system is characterised by high social security contributions for both employers and employees. As a result, Poland has one of the highest tax wedges in the OECD, despite relatively low personal income tax rates. This, combined with a relatively high minimum wage and generous early-retirement and disability benefit programmes, contributes to low employment rates, in particular among low-skilled workers. The system also relies heavily on consumption taxes, whereas relatively little revenue is collected from such bases as environment externalities, inheritances and, in particular, property. One of the key implications of the tax structure is that the system as a whole is one of the least redistributive among OECD countries. This paper reviews the main features of the tax system and explores options to improve its efficiency, including possibilities to broaden existing tax bases as well as to shift the tax burden from labour towards less mobile and distorting sources such as property. <P>Réformer le système fiscal polonais afin d’améliorer son efficience <BR>Le système fiscal polonais se caractérise par des cotisations patronales et salariales de sécurité sociale élevées. Par conséquent, la Pologne compte l’un des coins fiscaux les plus élevés de l’OCDE, malgré des taux de l’impôt sur le revenu des personnes physiques relativement bas. Cette situation, associée à un salaire minimum relativement conséquent et à des indemnités généreuses de retraite anticipée et d’invalidité, contribue à la faiblesse des taux d’emploi, surtout parmi les travailleurs peu qualifiés. Par ailleurs, le système s’appuie massivement sur les impôts sur la consommation, tandis que les recettes provenant d’autres sources telles que les taxes sur les produits polluants, les droits de mutation et surtout les impôts fonciers sont relativement minimes. L’une des principales conséquences de cette structure fiscale est que le système est, dans son ensemble, l’un des moins redistributifs parmi les pays de l’OCDE. Cette étude examine les principales caractéristiques du régime fiscal polonais et envisage différentes solutions pour améliorer son efficience, comme l’élargissement des assiettes d’imposition existantes et le transfert de la charge fiscale du travail vers des sources moins mobiles et entraînant moins de distorsions, telles l’immobilier.
    Keywords: taxation, fiscalité, tax reform, impôt sur le revenu, property tax, taxe foncière, TVA, labour tax wedge, VAT, personal income tax, corporate income tax, polish tax system, réforme de la taxation, coin fiscal, impôt sur les profits, système de taxation polonais
    JEL: H20 H22 H23 H24 H25
    Date: 2008–08–01
  4. By: Elsas, Ralf; Florysiak, David
    Abstract: Even 50 years after Modigliani/Miller’s irrelevance theorem, the basic question of how firms choose their capital structure remains unclear. This survey paper aims at summarizing and discussing corresponding recent developments in empirical capital structure research, which, in our view, are promising for future research. We first present some “stylized facts” on capital structure issues. The focus of the discussion is set on studies taking on the key idea to differentiate between competing theories by testing for firm adjustment behavior following shocks to their capital structure. In addition, we discuss empirical studies examining additional factors that may influence capital structure decisions, but have gained only recently attention in the literature (like corporate ratings or irrational managers). Since some of the available contradictory evidence on capital structure issues might be explained by econometric challenges due to the typical data structure, we also discuss methodological issues like panel data, endogeneity, and partial adjustment models in the capital structure context. Finally, we illustrate the methodological and empirical aspects discussed in this survey by providing corresponding evidence for exchange-listed German companies in the period 1987-2006.
    Keywords: Corporate finance; capital structure determinants; dynamic adjustment models
    JEL: G32
    Date: 2008–07
  5. By: Kaushal Kishore (Southern Methodist University)
    Abstract: The gain to competing governments from entering into binding non-preferential tax agree- ments (that prevents discriminatory taxation in favor of mobile capital) depends on the extent of capital mobility between jurisdictions. In particular the gain is increasing in the cost of re- location of capital and the fraction of the domestic tax base which is relatively immobile. We show this in a symmetric model of capital tax competition between two governments where all capital is imperfectly mobile and di¤er only in their cost of relocation.
    Keywords: Tax Competition, Capital Mobility, Non-Preferential Regime.
    JEL: F15 F21 H26 H87
    Date: 2008–07

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