nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2008‒10‒28
eight papers chosen by
Alexander Harin
Modern University for the Humanities

  1. The Value-Relevance of Adopting IFRS: Evidence from 145 NGAAP Restatements By Gjerde, Øystein; Knivsflå, Kjell Henry; Sættem, Frode
  2. IPSAS versus National Norms on Public Institutions' Own Capitals By Ecobici, Nicolae
  3. Comparative Survey on the Records of Fixed Assets of Companies and Public Institutions By Ecobici, Nicolae
  4. Study on reduced VAT applied to goods and services in the Member States of the European Union By Copenhagen Economics
  5. Effective Profit Taxation and the Elasticity of the Corporate Income Tax Base : Evidence from German Corporate Tax Return Data By Nadja Dwenger; Viktor Steiner
  6. The vulnerability of enterprise and the operating financial balance By Caruntu, Genu Alexandru; Romanescu, Marcel Laurentiu
  7. The corporate income tax rate-revenue paradox: Evidence in the EU By Joanna Piotrowska; Werner Vanborren
  8. Distributional analysis of prospective 2009 US individual income taxes: current law and the candidates’ tax plans By Berliant, Marcus; Strauss, Robert P.

  1. By: Gjerde, Øystein (Dept. of Finance and Management Science, Norwegian School of Economics and Business Administration); Knivsflå, Kjell Henry (Dept. of Accounting, Auditing and Law, Norwegian School of Economics and Business Administration); Sættem, Frode (Dept. of Finance and Management Science, Norwegian School of Economics and Business Administration)
    Abstract: Firms listed on stock exchanges within the European Economic Area are required to report consolidated financial statements according to IFRS from 2005. The firms that adopted IFRS in 2005 were also required to restate their 2004 financial statements from national GAAP to provide comparable accounting figures. These two sets of financial statements for 2004 are thus based on identical underlying economic activities and are fully specified according to two different reporting regimes. Our sample consists of 145 restatements from NGAAP to IFRS for firms listed on the Oslo Stock Exchange in Norway. We test whether the IFRS accounting figures correlate more strongly with stock market values than the corresponding NGAAP figures. We find little evidence of increased value-relevance after adopting IFRS when comparing and evaluating the two regimes unconditionally. On the other hand, when evaluating the change in the accounting figures from NGAAP to IFRS, we find evidence that the reconcilement adjustments to IFRS are marginally value-relevant due to increased relevance of the balance sheet and the normalized net operating income. By weighting our sample by firm size, intangible asset intensity and profitability, we learn that the increased value-relevance of the net operating income stems from different reporting of intangible assets. Since more intangible assets are capitalized according to IFRS than NGAAP, our finding is consistent with the view that capitalizing intangible assets is more value-relevant than expensing them as incurred or through goodwill amortization.
    Keywords: Value-relevance of reporting standards; IFRS versus NGAAP; accounting harmonization; balance sheet-oriented conceptual frameworks versus earningsoriented conceptual frameworks
    JEL: M41
    Date: 2008–10–17
  2. By: Ecobici, Nicolae
    Abstract: In this paper I have compared international standards on accounting for the public sector and those required by national norms on public institutions' own capitals, pointing out both convergences and divergences. Last, but not the least, I have compared IPSAS 1 (applied by public institutions) with IAS 1 (applied by commercial companies).
    Keywords: IPSAS; national norms; own capitals; accrual accounting; cash accounting; reference frame; residual interest; financial standing
    JEL: M0 L32 M41 H83 L33 M40
    Date: 2008–05–16
  3. By: Ecobici, Nicolae
    Abstract: This paper deals by way of comparison with the theoretical and practical methods to record the output and input of tangible fixed assets (non-current assets) in and from the patrimony of companies, on the one side and of public institutions, on the other side, intending to point out the differences and similarities, in compliance with the national norms and international standards of accounting (IAS and IPSAS, as the case may be).
    Keywords: fixed assets; long-term assets; non-current assets; tangible fixed assets; IAS; IPSAS
    JEL: L32 M41 P43 F32 H87 H83
    Date: 2008–05–15
  4. By: Copenhagen Economics (Copenhagen Economics)
    Abstract: Value Added Tax (VAT) in Europe is regularly subject to intensive debate. It is often argued that the current VAT system should be made more uniform to enhance economic efficiency and to protect the functioning of the internal market. But it is also regularly argued that extending reduced VAT to this or that particular product would create economic benefits such as more employment and less inequality. The study concludes that there seems to be a strong argument for making the current VAT structure more simple and uniform, but also an argument for selective cuts in VAT rates primarily in locally supplied services and parts of the hospitality sector. The authors stress the need to consider each case on its own merits and to appraise whether alternative non-VAT instruments may be preferable to reduced VAT rates.
    Keywords: European Union, VAT, taxation
    JEL: H24
    Date: 2008–10
  5. By: Nadja Dwenger; Viktor Steiner
    Abstract: We estimate the elasticity of corporate taxable income with respect to the effective corporate tax rate on the basis of a pseudo-panel constructed from corporate tax return micro data for the period 1998-2001, a period which saw the introduction of a major corporate tax reform in Germany. Endogeneity of the effective tax rate is controlled for by an instrumental variable approach. Our instrument for the observed effective corporate tax rate is the counterfactual effective tax rate a corporation would face in a particular period had there be no endogenous change of corporate profits. This counterfactual is obtained from a detailed microsimulation model of the corporate sector based on tax return micro data. We find a statistically significant and relatively large point estimate of the average tax base elasticity, which implies that a reduction of the statutory corporate tax rate would reduce corporate tax receipts less than proportionally due to income shifting activities. We also find some statistically weak evidence for the hypothesis that the tax base elasticity is higher for corporations that may benefit from various forms of tax shields.
    Keywords: corporate income taxation; tax base elasticity; micro simulation
    JEL: H32 H21 F23 C15
    Date: 2008
  6. By: Caruntu, Genu Alexandru; Romanescu, Marcel Laurentiu
    Abstract: In the light of functional analysis, the company is vulnerable if used, for the most time part, to financing through bank loans in the short term. This item is highlighted by the study compared of variation of the operating revolving fund, with the variation of revolving fund need. In the frame of operating balance, it believes that the need for floating capital is the most important indicator whereas place in the record those cyclical needs not covered financial from temporary resources and permanent renewable in the same cycles of operation. Achieving this balance is put into evidence of the 4 levels of functional balance, namely: working capital fund (FRF) or stable level of funding, the need for capital funds for operating (NFRE), on the one hand and the need to revolving fund outside exploitation (NFRAE) on the other hand, and the level of treasury securities.
    Keywords: liquidity; accounting net; treasury; imbalance; balance
    JEL: M1 P43 P42 E44 P34
    Date: 2008–10–10
  7. By: Joanna Piotrowska (Ministry of Finance, Poland); Werner Vanborren (European Commission)
    Abstract: In Europe, the decline in the corporate tax rates has not been reflected in the tax-to-GDP ratios. This paper explores to what extent the observed trend can be explained by changes in the effective tax burden on corporate income, in the share of total income accruing to the corporate sector and in total business income relative to GDP. We present an overview of the findings from previous literature, apply the methodology developed by S?rensen to decompose the most complete data available on the European level and make use of information collected from parallel studies on the effective tax burden and corporatization. The results suggest that corporatization is the driving factor for the trend observed in corporate tax revenues.
    Keywords: corporate taxation, tax revenues, incorporation, corporatization
    JEL: H25
    Date: 2008–10
  8. By: Berliant, Marcus; Strauss, Robert P.
    Abstract: The purpose of this paper is to compare the distributional characteristics of two presidential candidates’ proposed reforms to the US federal individual income tax. Using an anonymous sample of tax return data from the Brookings-Urban Institute Tax Policy Center and the Center’s simulations of 2009 tax law and the two proposals, we compare the vertical and horizontal equity of the three individual income tax regimes. Surprisingly, there is very little difference among the three proposed individual income tax regimes in terms of vertical and horizontal equity. However, when the initial effective tax rate positions and economic incomes of each pair of taxpayers are compared to the new effective tax rate positions under the two proposals, we find that the Obama proposal makes the tax system more progressive than 2009 law. This change is much more pronounced than under the McCain proposal. On the other hand, when these initial positions are compared to the two proposals viz. a viz. horizontal equity, the McCain proposed tax system is more horizontally equitable than 2009 tax law, and more horizontally equitable than the Obama proposal is when compared to 2009 tax law.
    Keywords: Tax equity; McCain tax plan; Obama tax plan
    JEL: D31 H24
    Date: 2008–10–22

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