nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2010‒11‒20
twelve papers chosen by
Alexander Harin
Modern University for the Humanities

  1. Economic implications of corporate financial reporting in brazilian and european financial markets By C. Benetti
  2. The Direct Incidence of Corporate Income Tax on Wages By Arulampalam, Wiji; Devereux, Michael P.; Maffini, Giorgia
  3. Looking for an Accounting Identity : The Case of Romania during the 20th Century By E. Barbu; N. Farcane; A. Popa
  4. How Optimal Nonlinear Income Taxes Change When the Distribution of the Population Changes By Craig Brett; John A. Weymark
  5. Remittances, Value Added Tax and Tax Revenue in Developing Countries By Christian EBEKE
  6. Tax audit productivity in New York State By Niu, Yongzhi
  7. Accounting and Labour Control at Boulton and Watt, c. 1775-1810 By Toms, Steven
  8. How does a fisacl reform affect elasticities of income tax revenues? the case os Spain, 2003-2008 By Diego Martinez-Lopez
  9. Are Household Surveys Like Tax Forms: Evidence from Income Underreporting of the Self Employed By Erik Hurst; Geng Li; Benjamin Pugsley
  10. Tax-Versus-Trading and Free Emission Shares as Issues for Climate Policy Design By Jack Pezzey; Frank Jotzo
  11. La réglementation de l'audit est-elle dans l'intérêt public : quelques enseignements du modèle français By C. Piot; A. Schatt
  12. La crise économique et financière impacte-t-elle la mission d'audit légal et de certification des comptes ? By E. Barbu; B. Mallet; S. Thealet

  1. By: C. Benetti (CERAG - Centre d'études et de recherches appliquées à la gestion - CNRS : UMR5820 - Université Pierre Mendès-France - Grenoble II)
    Abstract: The main objective of this study is to determine how the people involved in the accounting process consider the role of accounting information in an economic environment where capital markets play a major role. The study is also aimed at determining whether International Financial Reporting Standards (IFRS) will help fulfill this role. To this end, we compare the perceptions of financial officers, financial analysts and auditors, using Europe as a proxy for a highly developed capital market environment and Brazil as a proxy for a less developed capital market environment
    Keywords: Economic implications ; corporate financial reporting ; brazil ; europe ; financial markets
    Date: 2010
  2. By: Arulampalam, Wiji (University of Warwick); Devereux, Michael P. (University of Oxford); Maffini, Giorgia (University of Oxford)
    Abstract: We examine the extent to which taxes on corporate income are directly shifted onto the workforce. We use data on 55,082 companies located in nine European countries over the period 1996-2003. We identify this direct shifting through cross-company variation in tax liabilities, conditional on value added per employee. Our central estimate is that the long run elasticity of the wage bill with respect to taxation is -0.093. Evaluated at the mean, this implies that an exogenous rise of $1 in tax would reduce the wage bill by 49 cents. We find only weak evidence of a difference for multinational companies.
    Keywords: income tax, wage bargaining, effective incidence
    JEL: H22 H25 J50
    Date: 2010–10
  3. By: E. Barbu (CERAG - Centre d'études et de recherches appliquées à la gestion - CNRS : UMR5820 - Université Pierre Mendès-France - Grenoble II, ACM professionnal member - ACM professionnal member); N. Farcane (West University of TimiBoara - Faculty of Economics and Business Administration); A. Popa (University Eftimie Murgu Reşiţa - Faculty of Engineering, Reşiţa)
    Abstract: This article aims to provide a longitudinal presentation of developments in Romanian accounting during the 20th century and to propose a neo-institutional explanation of this evolution. The historical research methodology employed here is complex. We use a constructive research philosophy, an inductive research approach, a mixture of research types (narrative, oral and interpretative histories), content analysis as our research method and four types of data collection (archives, secondary data, observations and interviews). The interpretative analysis is based on the neo-institutional theoretical framework. The study identifies a “homeAgrown”, normative influence in Romanian accounting practices during the first 50 years of the twentieth century, a coercive one, imposed until 1989, by a centralized communist system, and from 1989 to the present, a mixed isomorphism oriented around French, European and International accounting systems. Lacking a period of introspection, the authors feel that there is little hope that Romanian accounting will reA discover its unique culture, or will manage to build upon or improve its indigenous base in the current international context
    Keywords: Accounting ; Historical approach ; Neo-institutionalism ; XXth century ; Romania
    Date: 2010
  4. By: Craig Brett (Department of Economics, Mount Allison University); John A. Weymark (Department of Economics, Vanderbilt University)
    Abstract: The impacts of changing the number of individuals of a particular skill level on the solutions to two versions of the finite population optimal nonlinear income tax problem are investigated. In one version, preferences are quasilinear-in-leisure. For this version, it is shown that it is possible to sign the directions of change in everyone's optimal consumptions and optimal marginal tax rates. In the other version, preferences are quasilinear-in-consumption. For this version, it is shown that is possible to sign the directions of change in everyone's optimal before-tax incomes and optimal marginal tax rates. Moreover, the directions of change in the optimal marginal tax rates are the same for the two specifications of preferences.
    Keywords: Asymmetric information, comparative statics, optimal income taxation
    JEL: D82 H21
    Date: 2010–04
  5. By: Christian EBEKE
    Abstract: This paper examines the impact of international remittances on both the level and the instability of government tax revenue in receiving countries. It investigates in particular whether the presence of a value added tax (VAT) system increases the benefit of the inflows of remittances in terms of high and less volatile tax revenue ratio. This is supported by the fact that remittances are largely used for consumption purposes and contribute to smoothing private consumption. Using a large sample of developing countries observed over the period 1980-2006, and even after factoring in the endogeneity of remittances and VAT adoption, the results highlight that remittances significantly increase both the level and the stability of government tax revenue ratio in receiving countries that have adopted the VAT.
    Keywords: Remittances, VAT, Tax revenue, Tax Revenue Instability
    JEL: O23 E32 F20 H20
    Date: 2010
  6. By: Niu, Yongzhi
    Abstract: This study employs both linear and non-linear approaches to examine tax audit productivity in New York State. The linear approach shows a positive relationship between audit revenue and the number of audit staff within the New York State Department of Taxation and Finance’s Audit Division. Using a narrower definition of “direct staff” which excludes upper level supervisors (staff at grade level 27 or higher, we find that the impact of an additional auditor is $590 thousand; using a broader definition of “direct staff”, which includes upper level supervisors (staff at grade level 27 or higher), the impact is $496 thousand. The non-linear approach discovers the diminishing marginal returns. At the current direct staff level (877 as of November 2008, the narrower definition) in the Audit Division, the marginal return of an extra direct staff member is $602 thousand, which is consistent with the results of the linear model. The results also show that in order to maximize net audit revenue the State needs to increase the number of auditors to 1,522, assuming the marginal cost of an additional auditor is constant at $200 thousand. The non-linear model provides a convenient way to determine the optimal level of staff, given the marginal cost of an additional auditor. Hence policymakers can use this non-linear model as a tool to maximize the State’s net audit revenue.
    Keywords: tax; audit productivity; diminishing returns; non-linear approach; audit output measures; audit input measures; optimal level; reciprocal model; impact lags
    JEL: H83 H71 H00 H26
    Date: 2010–11–12
  7. By: Toms, Steven
    Abstract: The paper offers a new perspective on the management and accounting practices at this pioneering firm of the British industrial revolution. Using a historical materialist approach, it offers an alternative to the economic rationalist, Foucauldian and Marxist explanations in the prior literature. Based on preliminary archival research, it shows how the business practices of Boulton and Watt reflected the norms of the eighteenth century and before rather than overtly capitalist methods and used accounting to solve the problems of pricing their product and the supervision and control of labour.
    Date: 2010–03
  8. By: Diego Martinez-Lopez (Department of Economics, Universidad Pablo Olavide.)
    Abstract: This paper estimates the extent to which an exogenous change in income affects income tax revenues. We focus on the case of Spain over the period 2003-2008, as income tax there underwent a substantial reform in 2007. Using both an analytical method and a numerical simulation, we find a significant increase in aggregate income tax elasticities from 1.4 for 2003-2003 to around 1.8 for 2007-2008. The sensitivity of results to the presence of housing tax credits, non-equiproportional variations in income, changes in income inequality and fiscal drag is also considered.
    Keywords: income tax elasticity; progressivity; tax rates; tax credits
    JEL: H20 H24
    Date: 2010–11
  9. By: Erik Hurst; Geng Li; Benjamin Pugsley
    Abstract: There is a large literature showing that the self employed underreport their income to tax authorities. In this paper, we quantify the extent to which the self employed systematically underreport their income to U.S. household surveys. To do so, we use the Engel curve describing the relationship between income and expenditures of wage and salary workers to infer the actual income, and thus the reporting gap, of the self employed based on their reported expenditures. We find that the self employed underreport their income by about 30 percent. This result is remarkably robust across data sources and alternative model specifications. Aside from transportation expenditures, we find little evidence that the self employed misreport their expenditures to household surveys. We show that failing to account for such income underreporting leads to biased conclusions when comparing the earnings and saving behavior between the self employed and other workers as well as biased estimates of the importance of precautionary savings, the shape of lifecycle earnings profiles, and the magnitude of earnings differences across MSAs. Finally, our results show that it is naive for researcher to take it for granted that individuals will provide unbiased information to household surveys when they are simultaneously providing distorted information to other administrative sources.
    JEL: C8 E21 H26 J3
    Date: 2010–11
  10. By: Jack Pezzey (Fenner School of Environment and Society at the Australian National University); Frank Jotzo (Resource Management in Asia-Pacific Program in the Crawford School of Economics and Government at the Australian National University)
    Abstract: We give empirical welfare results for global greenhouse gas emission control, using the first multiparty model to combine tax-versus-trading under uncertainties with revenue recycling. Including multiple parties greatly reduces the welfare advantage of an emissions tax over emissions (permit) trading in handling abatement-cost uncertainties, from that shown by existing, single-party literature. But a tax has a different, much bigger advantage, from better handling uncertainties in business-as-usual emissions. Either mechanism's free emissions share, from tax thresholds or free permits, which lowers its possible welfare gain from revenue recycling, may however dominate any tax-versus-trading advantage. Moreover, political and practical constraints, such as the political unacceptability of no free emissions, the institutional unavailability of efficient emissions tax thresholds, and the unpopularity of recycling revenue as conventional tax cuts, make ideal welfare maximisation a poor guide for mechanism choice; and at optimal prices, trading currently tends to outperform taxation.
    Date: 2010–09
  11. By: C. Piot (CERAG - Centre d'études et de recherches appliquées à la gestion - CNRS : UMR5820 - Université Pierre Mendès-France - Grenoble II); A. Schatt (LEG - Laboratoire d'Economie et de Gestion - CNRS : UMR5118 - Université de Bourgogne)
    Abstract: Cet article s'appuie sur les travaux académiques des dix dernières années pour évaluer les effets de la réglementation française visant à accroître l'indépendance des auditeurs. Pour les sociétés cotées en bourse, l'obligation de recourir à deux auditeurs se solde notamment par une moindre concentration du marché de l'audit : les Big Four détiennent une part de marché plus faible. Pour autant, les honoraires ne sont pas plus faibles, en raison vraisemblablement, d'une part, des coûts de coordination entre les deux auditeurs qui excèdent les bénéfices escomptés résultant d'un marché plus concurrentiel, d'autre part, de l'impossibilité de changer d'auditeur pendant la durée légale de six ans. Par ailleurs, la plus grande indépendance supposée, induite par cette réglementation spécifique, ne se traduit pas par une moindre gestion des résultats par les dirigeants français, malgré l'interdiction de facturer des honoraires de conseil. Ces constats empiriques nous conduisent à avancer que des assouplissements réglementaires du marché de l'audit pourraient s'avérer bénéfiques pour les actionnaires des entreprises françaises
    Keywords: Audit ; Réglementation; France ; Concentration ; Honoraires ; Gestion des résultats ; Audit ; Regulation ; France ; Concentration ; Audit fees ; Earnings management
    Date: 2010
  12. By: E. Barbu (CERAG - Centre d'études et de recherches appliquées à la gestion - CNRS : UMR5820 - Université Pierre Mendès-France - Grenoble II, ACM professionnal member - ACM professionnal member); B. Mallet (Experts & Consultants Associés - Experts & Consultants Associés); S. Thealet (Experts & Consultants Associés - Experts & Consultants Associés)
    Abstract: L'article vise à montrer comment le commissaire aux comptes (CAC) doit adapter sa mission à un contexte de crise économique et financière. En effet, le CAC doit mettre en œuvre des diligences spécifiques au contexte économique, puisque certains risques sont ainsi amplifiés, comme ceux tenant à la continuité d'exploitation et à la mauvaise estimation du résultat comptable. En outre, le rapport général du commissaire peut lui aussi être nuancé en raison de l'incertitude pesant sur certains éléments, ce qui peut induire des asymétries d'information. L'analyse théorique de la situation est complétée par une étude de cas portant sur une société située dans un secteur touché par la crise financière actuelle, à savoir la fabrication de matériels électriques de pointe.
    Keywords: crise financière ; commissaires aux comptes ; mission générale ; France ; étude de cas ; financial crisis ; auditors ; France ; case study
    Date: 2010

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