nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2008‒10‒13
five papers chosen by
Alexander Harin
Modern University for the Humanities

  1. Effects of Flat Tax Reforms in Western Europe on Income Distribution and Work Incentives By Paulus, Alari; Peichl, Andreas
  2. An exploration of the factors affecting the diffusion of Advanced Costing techniques: a comparative analysis of two surveys (1996-2005) By Cinquini, Lino; Collini, Paolo; Marelli , Alessandro; Tenucci, Andrea
  3. The European Commission´s Proposal for a Common Consolidated Corporate Tax Base By Clemens Fuest
  4. Corporate Income Taxation in Canada By George R. Zodrow
  5. The Relative and Incremental Explanatory Powers of Dirty Surplus for Debt Interest Rate By Akinobu Shuto; Shota Otomasa; Kazuyuki Suda

  1. By: Paulus, Alari (ISER, University of Essex); Peichl, Andreas (IZA)
    Abstract: The flat income tax has become increasingly popular recently, yet its implementation is limited to Eastern Europe. We analyse the distributional and efficiency effects of flat tax scenarios for Western European countries. Our simulations show that flat tax rates required to attain revenue neutrality with existing basic allowances improve labour supply incentives. However, they result in higher inequality and polarisation. Flat rates necessary to keep the inequality levels unchanged allow for some scope for flat taxes to increase both equity and efficiency. Our analysis suggests that Mediterranean countries are more likely to benefit from flat taxes.
    Keywords: flat tax reform, income distribution, work incentives, microsimulation
    JEL: C81 D31 H24
    Date: 2008–09
  2. By: Cinquini, Lino; Collini, Paolo; Marelli , Alessandro; Tenucci, Andrea
    Abstract: The issue of cost calculation has been largely debated in the last years under the pressure of the perceived lost of relevance of the so called "traditional cost accounting approaches". The enthusiasm for new management accounting techniques has often driven most of attention towards technical or theoretical aspects of the proposed new cost models. In particular, Activity-Based Costing (ABC) implementation literature pinpoints a large number of studies that have looked at technical and organizational/behavioral factors that influence effective implementation. Recently a great attention has been paid by researchers on the contingent factors affecting the adoption of advanced management accounting techniques and the influence of the variables that drive towards higher levels of cost system sophistication. The need is felt for insightful studies regarding processes and contingent variables working through time in relation with these changes. Improved analysis can be obtained by undertaking replication studies based on larger number of responses and/or across geographic and cultural borders. Whitin the boundaries of a contingent framework analysis, this paper has provided additional insights into areas relating to factors influencing the level of sophistication of product cost systems in Italy. The paper presents the comparison of two survey results carried on in a ten years distance on the same sample of Italian largest companies. These two long-distance surveys provide the opportunity to assess the changes occurred in the companies that in 1996 declared the adoption of (or the interest in adopting) ABC and Target costing (Cinquini et al., 1999).Moreover, the time elapsed could allow the perception about adopters’ behavior, along different stages of the diffusion process of advanced costing techniques. The research findings pinpoint that only “importance of cost information” and “cost structure”, among the contextual variables considered in the more recent survey responses, are positive and significant in relation with increasing in implementation of advanced costing techniques. This outcome could open to further studies to assess whether or not adopters are moving from a “fad and fashion” behavior of the early stages, to a more rational approach in which the matching between management needs and tools potentiality is maximized.
    Keywords: Management accounting innovations; Activity-Based Costing; Target costing; Product costing design; Cost system sophistication; Contingent factors
    JEL: M1
    Date: 2008
  3. By: Clemens Fuest (Oxford University Centre for Business Taxation)
    Abstract: The European Commission currently prepares a proposal for a directive on the introduction of a Common Consolidated Corporate Tax Base (CCCTB). This paper reviews the current state of the European Commission´s preparation of the CCCTB proposal and discusses the implications for efficiency and fairness of the tax system. The analysis concludes that more evidence of significant economic benefits from introducing a CCCTB would be required to generate widespread support for the project.
    Keywords: Corporate Taxation; European Commission, CCCTB
    JEL: H25
    Date: 2008
  4. By: George R. Zodrow (Rice University, Oxford University Centre for Business Taxation)
    Abstract: This paper examines Canadian corporate income tax policy, focusing on the implications of international capital mobility, international tax competition – including the need for a corporate tax structure that is competitive with respect to the United States and other competing economies – and international tax avoidance. The paper begins by considering the arguments for tax exemption or even subsidization of capital income, and then examines the many qualifications to these arguments. This analysis pays particular attention to the implications of the existence of firm-specific and location-specific economic rents and the issues raised by new techniques for international tax avoidance. In all cases, the discussion of theoretical arguments is followed by an examination of the empirical evidence, including studies specific to Canada as available. The paper then traces out the implications of the analysis for corporate income tax policy in Canada, including the recently enacted corporate income tax rate reductions and other potential reforms.
    Keywords: Canadian corporate income tax, business tax reform, international tax competition, international tax avoidance, international capital mobility
    JEL: H20 H25
    Date: 2008
  5. By: Akinobu Shuto (Research Institute for Economics and Business Administration, Kobe University); Shota Otomasa (Faculty of Commerce, Kansai University); Kazuyuki Suda (Graduate School of Finance, Accounting, and Law, Waseda University)
    Abstract: This study investigates the relationship between dirty surplus items on the balance sheet and the cost of debt for Japanese firms. We focus on three dirty surplus items—unrealized gains and losses on available-for-sale securities (SEC), foreign currency translation adjustment (FOC), and land revaluation surplus (LAND). While many previous studies on dirty surplus adopted the value-relevance perspective, we examine the effect of dirty surplus items on the interest rate spread of bonds from the contractual perspective. We use the Vuong (1989) test to evaluate the relative explanatory power of the equity ratio with and without dirty surplus items for the interest rate spread on bonds issued. We find evidence that the equity ratio with dirty surplus items is more strongly associated with the debt interest rate than that without dirty surplus items. The results suggest that the total amount of dirty surplus items have statistically significant explanatory power for the interest rate spread. However, some dirty surplus items do not have explanatory powers for the bond interest rate spread. While FOC has relative and incremental explanatory powers and SEC has only incremental explanatory power, LAND has neither relative nor incremental explanatory power for the bond interest rate spread. The results mean that FOC and SEC are useful to Japanese firms for bond contracting.
    Keywords: Dirty surplus items; Cost of debt; Relative information content; Incremental information content
    JEL: M41
    Date: 2007–08

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