nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2010‒12‒04
six papers chosen by
Alexander Harin
Modern University for the Humanities

  1. The role of monetary policy in matters relating to financial stability: Monetary policy responses adopted during the most recent Financial Crisis By Ojo, Marianne
  2. Rekindling Governments from Within: Getting Public Sector Elite Officials to Support Government Reform in Brazil By Monica Pinhanez
  3. What was actually cut in the barber' VAT cut? By Tuomas Kosonen
  4. Tax reform in Europe over the next decades By Dr. Christin Lutz; Dr. Ulrike Lehr
  5. The Impact of Auditor Rotation on the Audit Quality: A Field Study from Egypt By Diana Mostafa; Magda Hussien
  6. On the path-dependence of tax compliance By Lisa Bruttel; Tim Friehe

  1. By: Ojo, Marianne
    Abstract: As well as providing an analysis of how financial stability could be sustained through the appropriate targeting of policy instruments at debt gearing, this paper aims to provide an overview of the respective roles which governments and shareholders could assume in deterring financial institutions from overly relying on certain policy measures (role of governments) and in reducing tax burdens on tax payers (role of shareholders). The duration of the recent Crisis has also witnessed the introduction of mechanisms aimed at bailing- in financial institutions – rather than merely bailing them out. Even though monetary policy measures should ultimately be targeted at macro level, the respective roles assumed by governments and shareholders at micro level in facilitating the phasing out of certain monetary policy measures and assuming responsibility as the first resort during the impending collapse of a financial institution, are also of vital importance. This paper also aims to consider additional measures which could be implemented as a means of mitigating the number of financial instititions which could become overly dependent on monetary policy and liquidity sustenance measures provided during deteriorating financial conditions. Greater focus on strategies aimed at mitigating the number of financial institutions which could become overly dependent (bail-in strategies which could address bail outs) – rather than simply focussing on measures and exit strategies aimed at weaning such institutions after assistance has been granted to these financial institutions, could prove to be more effective. A brief comparative analysis of the monetary policy response implemented in the Euro area during the recent Financial Crisis (against that which was implemented in the United States), will also be provided in this paper.
    Keywords: monetary policy; central banks; financial crises; bail in; bail outs; liquidity; ECB; Federal Reserve; interest rates; regulation; stability; capital; Basel III
    JEL: K2 E32 E58 E52
    Date: 2010–11–24
  2. By: Monica Pinhanez
    Abstract: This paper shows how an elite cadre of public sector officials played a key role in the success of administrative reforms in Brazil’s state tax administration bureaus in the 1990s. The success of the reforms strengthened public sector bureaucracies and institutions at all government levels, predominantly in the tax departments. At the state level, the tax administrative reforms comprised complex changes in organizational structure, technology, and institutional arrangements. These reforms resulted in increased tax revenues, tax compliance, and successful restructuring. For the public officials who took part in the process, the reforms meant finding a new identity, and a new mission. As such, this paper explores an alternative mode of getting public sectors officials to commit and own public sector changes.
    Keywords: tax administrative reform, elites, public sector bureaucrats
    Date: 2010
  3. By: Tuomas Kosonen
    Abstract: The tax incidence of consumption taxes across various sectors of the economy is a key aspect when designing a tax structure. However, there are very few empirical findings on this subject. This paper studies the tax incidence of consumption taxes utilising a VAT reform targeted at labour-intensive services in Finland. The reform creates a natural experiment set-up, because the reduced VAT was targeted at hairdressers, whereas the normal tax treatment still applied to beauty salons. This experiment is exogenous to the economic conditions of hairdressers in Finland, since this group was selected in a European Commission Directive. I study the effects of the reform on prices and demand. The results suggest that barbers cut their prices only by half of what complete pass-through would have implied. Using the experiment as an instrument, I find little effect on demand. Thus, there does not seem to be any indication of a significant effect on labour demand.
    Keywords: Consumption tax incidence, VAT, labour intensive services
    Date: 2010–11–23
  4. By: Dr. Christin Lutz (GWS - Institute of Economic Structures Research); Dr. Ulrike Lehr (GWS - Institute of Economic Structures Research)
    Abstract: Study for the European Environmental Agency, Copenhagen “Tax reform in Europe over the next decades: implication for the environment, for eco-innovation and for household distribution” Task A: Eco-innovation Literature review on eco-innovation and ETR Modelling of ETR impacts with GINFORS
    Keywords: Tax, Europe
    JEL: H
    Date: 2010
  5. By: Diana Mostafa (Faculty of Management Technology, The German University in Cairo); Magda Hussien (Faculty of Commerce, Ain Shams University, Cairo)
    Abstract: Lack of audit quality and subsequent audit failures result mainly from a lack of independence which is considered to be a consequence of the extended auditor client relationship. Actually, the results of a questionnaire distributed among auditors in Egypt confirm this hypothesis: The Auditors strongly agree that there is a lack of auditor independence in Egypt. The main reason is that most of the companies are closely held and that there is a lack of existence of code of ethics for auditing practitioners in Egypt. Also, the results indicate that the mostly accepted solution by the auditors to overcome the lack of independence problem is the mandatory auditor rotation. Consequently, the paper suggests that mandatory firm rotation instead of mandatory partner rotation should be applied in Egypt.
    Keywords: Audit Quality, Auditor Rotation, Auditor Independence, Egypt
    JEL: M42 M40
    Date: 2010–11
  6. By: Lisa Bruttel; Tim Friehe
    Abstract: This paper presents experimental evidence that tax compliance is path dependent. We show that individuals faced with the same current tax enforcement parameters, will nevertheless choose different compliance if they have faced different tax enforcement parameters in the past. This finding has important policy implications. For instance, legal harmonization in the EU cannot be expected to reliably yield similar behavior in countries with different legal histories.
    Keywords: Tax compliance, Path dependence, Experiment
    Date: 2010

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