nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2009‒05‒30
three papers chosen by
Alexander Harin
Modern University for the Humanities

  1. Is European accounting research fairly reflected in academic journals? An investigation of possible non-mainstream and language barrier biases By Bernard Raffournier; Alain Schatt
  2. The valuation of tax shields induced by asset step-ups in corporate acquisitions By Groh, Alexander P.; Henseleit, Christoph
  3. Modeling excess profit By Carlo Alberto Magni

  1. By: Bernard Raffournier (HEC University of Geneva); Alain Schatt (Université de Bourgogne)
    Abstract: Recent research has revealed that most articles published in top US accounting journals come from institutions based in the US or a small number of other English-speaking countries (Jones and Roberts, 2005). It has also been shown that the research paradigm favoured by US journals is financial economics, with the result that articles on accounting history or social and behavioural accounting are very scarce. European journals exhibit a more diverse content. Nevertheless, as shown by some studies, British authors are the main contributors to these journals. As a consequence, the assertion has been made that the published literature is not perfectly representative of the diversity of European accounting research. The aim of this study is to test the validity of this assertion by comparing the content of eighteen major academic journals in accounting over five years (2000-2004) with the set of papers presented at the EAA congress in 2003, 2004 and 2005. The results give some support to the assertion that the diversity of European accounting research is imperfectly reflected in academic journals. They also are consistent with the idea that non English-speaking scholars are at a competitive disadvantage in the race for publication in recognized periodicals.
    Keywords: European accounting research; academic journals; language barrier biaises.
    JEL: M40
    Date: 2009–03
  2. By: Groh, Alexander P. (IESE Business School); Henseleit, Christoph (Bain & Co. Munich)
    Abstract: We derive discount rates for depreciation and amortization tax shields resulting from asset step-ups in corporate mergers and acquisitions. By assigning all relevant sources of uncertainty for such kind of tax shields and by accounting for corporate debt it is shown that for APV valuations r*, a rate between the firm's cost of debt and the risk-free rate, is adequate to discount step-up induced depreciation benefits. When the benefits are valued on a standalone basis, the adequate discount rate is the after-tax weighted average of r*. Discount rates for these shields have been determined arbitrarily in empirical research on corporate acquisitions so far. However, they are found to be in line with the rates deduced in this paper.
    Keywords: Tax Shield; Step-up Depreciation; Valuation;
    JEL: G12 G34
    Date: 2009–03–05
  3. By: Carlo Alberto Magni
    Abstract: This paper deals with the problem of modelling in a formal way the concept of excess profit, also known as residual income. A common idea is that excess profit is an unequivocal concept, being the diference between profit and costs, where all types of costs are taken into account, included the opportunity cost, i.e. the profit the entrepreneur would obtain if she invested in another business. This paper aims at showing that this diference is not univocal and that diferent approaches may be followed to give voice to such a notion. It turns out that two diferent interpretations are possible. The one existing in the literature is well described by Preinrich (1938), Edwards and Bell (1961) and, more recently, by Peasnell (1981, 1982) in the accounting literature and by Stewart (1991) in the value-based management literature. The interpretation here provided gives rise to a diferent way of modelling the notion of excess profit. While the existing models are tied to the financial literature, the model here presented is more akin to a microeconomic perspective. The paper focuses on the formal relations among the various models and necessary and sufficient conditions are provided for the integration of all models in the systemic framework here adopted. Furthermore, it shows that the systemic paradigm enjoys an aggregation property which makes residual incomes aggregate in a value sense and enables one to reduce forecasting errors in valuation.
    Date: 2009–05–17

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