nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2009‒03‒07
five papers chosen by
Alexander Harin
Modern University for the Humanities

  1. Audit Committees in Listed Companies: An International Comparison of Composition and Meetings By E. VAN GANSBEKE; P. EVERAERT; G. SARENS; I. DE BEELDE
  2. A theoretical and practical study on linear reforms of dual taxes By Samuel Calonge; Oriol Tejada
  3. Wine Taxes, Production, Aging and Quality By Rachael E. Goodhue; Jeffrey LaFrance; Leo K. Simon
  4. Audit contracts and reputation By Yolanda Portilla
  5. The Elasticity of Taxable Income: Estimates and Flat Tax Predictions using the Hungarian Tax Changes in 2005 By Péter Bakos; Péter Benczúr; Dora Benedek

    Abstract: tba
    Date: 2008–09
  2. By: Samuel Calonge; Oriol Tejada (Universitat de Barcelona)
    Abstract: We extend the linear reforms introduced by Pf ahler (1984) to the case of dual taxes. We study the relative effect that linear dual tax cuts have on the inequality of income distribution -a symmetrical study can be made for dual linear tax hikes-. We also introduce measures of the degree of progressivity for dual taxes and show that they can be connected to the Lorenz dominance criterion. Additionally, we study the tax liability elasticity of each of the reforms proposed. Finally, by means of a microsimulation model and a considerably large data set of taxpayers drawn from 2004 Spanish Income Tax Return population, 1) we compare different yield-equivalent tax cuts applied to the Spanish dual income tax and 2) we investigate how much income redistribution the dual tax reform (Act 35/2006) introduced with respect to the previous tax.
    Keywords: lattices, dual taxes, lorenz domination, linear reforms
    JEL: E60 E62
    Date: 2009
  3. By: Rachael E. Goodhue; Jeffrey LaFrance; Leo K. Simon (School of Economic Sciences, Washington State University)
    Abstract: We consider the impact of taxes on the quantity and quality produced of goods, such as wine, for which market value accrues with age by a competitive producer. Any pair of taxes that includes a volumetric sales tax and any one of three other types of tax – an ad valorem sales tax, an ad valorem storage tax, or a volumetric storage tax – spans the full range of feasible tax revenues with positive tax rates. For any tax system that reduces quality relative to the firm’s no-tax equilibrium, there is another tax system that increases tax revenues, eliminates the quality distortion, and does not increase the quantity distortion. Many wine industry observers believe that most, if not all, existing tax systems tend to result in the suboptimal provision of quality. Our results suggest that the wide variety of wine tax systems is not prima facie evidence that these systems, or most of them, are inefficient. Provided the system includes a volumetric sales tax it may be efficient, regardless of which of the other instruments, or how many of them, are used. Assertions regarding inefficiency must be evaluated on an empirical case-by-case basis. Our analysis provides a theoretical framework for such research.
    Keywords: aging, Alchian-Allen effect, tax policy, wine
    Date: 2009–02
  4. By: Yolanda Portilla
    Abstract: This paper characterizes the contractual relationship between an external auditor and a manager of a client firm when the incentives for both agents are implicit as in the career concerns framework. The main result is that the earning management and the audit effort are decreasing over time because the incentives to build a reputation also decline for both agents in spite of a managers first mover advantage. This suggests that the audit effort should be higher when the auditor is an emerging firm and the future employment opportunities for the client firm´s manager are larger.
    Keywords: Contract theory, Career concerns, Reputation, Auditing
    JEL: C73 G38 D82 D83
    Date: 2008–12
  5. By: Péter Bakos; Péter Benczúr; Dora Benedek
    Abstract: Many Central and Eastern European countries are adopting flat tax schemes in order to boost their economies and tax revenues. Though there are signs that some countries do manage to improve on both fronts, it is in general hard to distinguish the behavioral response to tax changes from the effect of increased tax enforcement. This paper addresses this gap by estimating the elasticity of taxable income in Hungary, one of the outliers in terms of not having a flat tax scheme. We analyze taxpayer behavior using a medium-scale tax reform episode in 2005, which changed marginal and average tax rates but kept enforcement constant. We employ a Tax and Financial Control Office (APEH) panel dataset between 2004 and 2005 with roughly 215,000 taxpayers. Our results suggest a relatively small but highly significant tax price elasticity of about 0.06 for the population earning above the minimum wage (around 70% of all taxpayers). This number increases to around 0.3 when we focus on the upper 20% of the income distribution, with some income groups exhibiting even higher elasticities (0.45). We first demonstrate that such an elasticity substantially modifies the response of government revenues to the 2004-2005 tax changes, and then quantify the impact of a hypothetical flat income tax scheme. Our calculations indicate that though there is room for a parallel improvement of budget revenues and after-tax income, those gains are modest (2% and 1.4%, respectively). Moreover, such a reform involves important adverse changes in income inequality, and its burden falls mostly on lower-middle income taxpayers.
    Keywords: elasticity of taxable income, tax reform, behavioral response, revenue estimation, flat tax
    JEL: H24 H31
    Date: 2008–08–04

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