nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2009‒04‒18
nine papers chosen by
Alexander Harin
Modern University for the Humanities

  1. Agglomeration, tax competition, and fiscal equalization By Matthias Wrede
  2. Adoption and diffusion of double entry book-keeping in Mexico and Spain: A related but under-investigated development By Batiz-Lazo, Bernardo; Hernandez-Borreguero, Julian; Maixe-Altes, J. Carles; NuÑez-Torrado, Miriam
  3. Information Asymmetry, Information Precision, and the Cost of Capital By Richard A. Lambert; Christian Leuz; Robert E. Verrecchia
  4. Disclosure and the Cost of Capital: Evidence from Firms’ Responses to the Enron Shock By Christian Leuz; Catherine Schrand
  5. Separate Cash Flow Evaluations - Applications to Investment Decisions and Tax Design By Emhjellen, Magne; Osmundsen, Petter
  6. LNG Project Valuation with Financial Leasing Contracts By Emhjellen, Magne; Løvås, Kjell; Osmundsen, Petter
  7. An Economic Analysis on Pension Financing Methods: Is VAT Better than Wage Proportional Tax? By Junichiro Takahata
  8. Regional Fiscal Flows: Measurement Tools By Giuseppe C.Ruggeri
  9. Principer för hållbarhetsredovisning i teori och praktik: En studie av fjärrvärmebranschen. By Helin, Sven; Frostenson, Magnus

  1. By: Matthias Wrede (University of Marburg)
    Abstract: This paper analyzes the impact of fiscal equalization on asymmetric tax competition when positive agglomeration externalities are present. It shows that equalization of standardized tax revenue improves the spatial allocation of capital provided that agglomeration externalities are sufficiently strong.
    Keywords: Agglomeration, tax competition, fiscal equalization.
    JEL: R12 H71 H73
    Date: 2009
  2. By: Batiz-Lazo, Bernardo; Hernandez-Borreguero, Julian; Maixe-Altes, J. Carles; NuÑez-Torrado, Miriam
    Abstract: There is a consensus within Mexican accounting historiography regarding widespread use of double entry bookkeeping by the end of the 19th Century in the realm of both private and public enterprise. However, there is conflicting and even contradictory claims as to when exactly this technique arrived to the viceroyalty of New Spain (present day Mexico) as well as its diffusion during the colonial era. In this article we address this conflict while putting forward the idea that the history of ‘modern’ accounting practice in Latin America should be framed by developments in its former colonial power. We offer the analysis of primary and secondary source material to support the view that there was continuity in the use of double entry in Spain and therefore, the so called ‘period of silence and apparent oblivion’ seems limited to the production of indigenous accounting thought (as expressed in the production of bibliographic material such as manuals and textbooks). We conclude that the history of Latin America accounting should be wary of extrapolating everyday practice by interpreting bibliographic material and proceed by examining surviving company documents as well as informal educational practices amongst organisations based in the metropolis and its then colonies.
    Keywords: double entry; diffusion of accounting systems; knowledge transfer; Mexico (New Spain); Spain
    JEL: N8 M41 N46 N44
    Date: 2009–04–14
  3. By: Richard A. Lambert; Christian Leuz; Robert E. Verrecchia
    Abstract: The consequences of information differences across investors in capital markets are still much debated. This paper examines the relation between information differences across investors and the cost of capital, and makes three points. First, in models of perfect competition, information differences across investors affect a firm’s cost of capital through investors’ average information precision, and not information asymmetry per se. Second, the average precision effect of information that is heterogeneously distributed across investors is unlikely to diversify away when there exist many firms whose cash flows covary. Thus, better disclosure can reduce a firm’s cost of capital. Third, the precision effect does not give rise to a separate information-risk factor. These points are important to empirical research in accounting and finance, as well as to regulators who debate future disclosure requirements and the consequences of prior requirements such as Regulation Fair Disclosure.
    JEL: G12 G14 G31 M41
    Date: 2009–04
  4. By: Christian Leuz; Catherine Schrand
    Abstract: This paper examines the link between disclosure and the cost of capital. We exploit an exogenous cost of capital shock created by the Enron scandal in Fall 2001 and analyze firms’ disclosure responses to this shock. These tests are opposite to the typical research design that analyzes cost of capital responses to disclosure changes. In reversing the tests and using an exogenous shock, we mitigate concerns about omitted variables in traditional cross-sectional disclosure studies. We estimate shocks to firms’ betas around the Enron events and the ensuing transparency crisis. Our analysis shows that these beta shocks are associated with increased disclosure. Firms expand the number of pages of their annual 10-K filings, notably the sections containing the financial statements and footnotes. The increase in disclosure is particularly pronounced for firms that have positive cost of capital shocks and larger financing needs. We also find that firms respond with additional interim disclosures (e.g., 8-K filings) and that these disclosures are complementary to the 10-K disclosures. Finally, we show that firms’ disclosure responses reduce firms’ costs of capital and hence the impact of the transparency crisis.
    JEL: G12 G14 G30 M41 M42
    Date: 2009–04
  5. By: Emhjellen, Magne; Osmundsen, Petter (University of Stavanger)
    Abstract: ,
    Keywords: Oil; project; evaluation
    JEL: A10
    Date: 2009–04–09
  6. By: Emhjellen, Magne; Løvås, Kjell; Osmundsen, Petter (University of Stavanger)
    Abstract: ,
    Keywords: Project valuation; Capital budgeting; Financial Leasing; Financial cost
    JEL: G31 G32
    Date: 2009–04–09
  7. By: Junichiro Takahata
    Abstract: Recently, Japanese public pension scheme has been discussed more often, especially about how to finance the scheme. It is possible to finance the scheme by wage-proportional contribution or by Value-Added-Tax, but the allocation may be different depending on the financial method. I find that an optimal tax rate is 0 percent at steady state under either method by using a dynamic general equilibrium model with individuals living at longest 80-period in an incomplete market setting. Moreover, I show that it is better to have the scheme with Value-Added-Tax when we have a certain amount of public pension scheme.
    Keywords: ”N‹àAÁ”ïÅ•ûŽ®Aˆê”Ê‹Ït
    JEL: E21 E62 H21 H24
    Date: 2009–03
  8. By: Giuseppe C.Ruggeri (University of New Brunswick)
    Abstract: This paper discusses the methodology for the calculation of federal fiscal flows in a federation and the measurement of interregional redistribution. It identifies five major steps: (a) the selection of the approach for calculating federal fiscal flows, (b)the allocation of federal revenues and expenditures among regions, (c) the choice of the appropriate concept of regional economic disparities, (d) the selection of the relevant indicators of interregional redistribution, and (e) the estimation of these indicators. It concludes with some suggestions for further research, stressing the need to develop a common methodology and to place the study of interregional redistribution in a dynamic context.
    Keywords: Methodology, interregional redistribution, fiscal federalism.
    JEL: B41 H77
    Date: 2009
  9. By: Helin, Sven (Department of Business, Economics, Statistics and Informatics); Frostenson, Magnus (Uppsala University)
    Abstract: Intresset för hållbar utveckling har ökat markant under det senaste åren. Inte minst märks det i att allt fler företag numera lämnar hållbarhetsredovisningar. I takt med denna utveckling har även olika ramverk växt fram för att utveckla kvaliteten på dessa redovisningar där GRI(GlobalReportingInitiative)är den vanligast förekommande. I den här rapporten granskar vi fjärrvärmeföretag (143 företag) i syfte att kartlägga hur de redovisar hållbarhetsinformation och om de redovisningsprinciper som presenteras i GRI:s ramverk beaktas och tillämpas. Resultatet visar att endast ett fåtal av företagen följer GRI:s ramverk men att ungefär hälften av företagen lämnar någon form av hållbarhetsredovisning separat eller som en del av årsredovisningen. Studien visar också att den information som lämnas av de företag som inte följer GRI:s riktlinjer är olikartad och ofta saknar precision varför exempelvis möjligheten att jämföra företag är liten samt pekar på att behovet av redovisningsstandards för hållbarhetsredovisning.
    Keywords: Sustainability reporting; GRI; energy industry; Sweden
    JEL: M40
    Date: 2009–03–27

This nep-acc issue is ©2009 by Alexander Harin. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.