nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2011‒03‒26
seven papers chosen by
Alexander Harin
Modern University for the Humanities

  1. America’s Underground Economy: Measuring the Size, Growth and Determinants of Income Tax Evasion in the U.S By Feige, Edgar L.; Cebula, Richard
  2. Revenue Equalization Systems in a Federation with Tax Evasion By Lisa Grazzini; Alessandro Petretto
  3. Contextual Influences on Evaluative Style and its Effectiveness: Three Avenues for Future Research By Noeverman, J.; Koene, B.A.S.
  4. Fiscal Decentralization and Local Tax Effort By Raghbendra Jha; Woojin Kang; Hari K. Nagarajan
  5. The Liquidation - based on Evaluation and Accounting Information By Goagara, Daniel; Giurca Vasilescu, Laura
  6. How do Firm Characteristics Affect Capital Structure? Some UK Evidence.. By Akdal, Sinan
  7. Risk Analysis of Accounting Information System Infrastructure By MIHALACHE, Arsenie-Samoil

  1. By: Feige, Edgar L.; Cebula, Richard
    Abstract: Abstract This study empirically investigates the extent of non compliance with the tax code and the determinants of federal income tax evasion in the U.S. Employing the most recent data we find that 18-19% of total reportable income is not properly reported to the IRS, giving rise to a “tax gap” approaching $500 billion dollars. Three time periods are studied, 1960-2008, 1970-2008, and 1980-2008. It is found across study periods that income tax evasion is an increasing function of the average effective federal income tax rate, the unemployment rate, public dissatisfaction with government, and per capita real GDP (adopted as a measure of income), and a decreasing function of the Tax Reform Act of 1986 (during its first two years of being implemented). Modest evidence of a negative impact of IRS audit rates on tax evasion is also detected.
    Keywords: Underground economy; unreported economy; tax evasion; tax gap; non compliance; Federal income tax
    JEL: O17 E52 E26 H26 E41
    Date: 2011–01
  2. By: Lisa Grazzini (Università degli Studi di Firenze, Dipartimento di Scienze Economiche); Alessandro Petretto (Università degli Studi di Firenze, Dipartimento di Scienze Economiche)
    Abstract: We analyse how vertical or horizontal fiscal equalization affects the overprovision of local public goods due to vertical fiscal externality, when there is tax evasion. The regional governments overspending incentive is examined both in case of a fiscal equalization based on pretax earned income and reported taxable income.
    Keywords: Fiscal federalism; Equalization; Marginal Cost of Public Funds, Tax evasion
    JEL: H2 H41 H71 H77
    Date: 2011
  3. By: Noeverman, J.; Koene, B.A.S.
    Abstract: Many accounting studies have investigated the effects of differences in evaluative style on subordinate managers’ attitudes and performance. These studies have usually based the distinction of different evaluative styles on the extent to which a superior uses and relies on accounting performance measures when evaluating subordinate managers’ performance. The literature on this concept of evaluative style has become known as RAPM (reliance on accounting performance measures). Recently, this literature has been subject to severe criticism. This paper argues that to gain relevance for the accounting and management community, future research on evaluative style needs to (1) incorporate the development in management accounting and control towards a broad array of information, (2) recognize the importance of organizational context and control system design for understanding evaluative style effectiveness, and (3) consider characteristics of the superior-subordinate relationship. The relevance of these three issues is empirically illustrated with interview data from a pilot study. Overall, these three avenues for future research provide a valuable approach to increase our understanding of evaluative style effectiveness in contemporary organisations.
    Keywords: evaluative style;accounting;control;performance measurement;dyad
    Date: 2010–12–31
  4. By: Raghbendra Jha; Woojin Kang; Hari K. Nagarajan
    Abstract: In India an important policy initiative has been the devolution of financial responsibilities to village level local governments called the Panchayats. The Preamble to this initiative is two fold. First such devolution would not only lead to increased public expenditure but also such expenditures being targeted in a manner consistent with the preferences and needs of the local population. Second, the local tax base would widen, thereby reducing the magnitude of the equalization transfers. However, the incentive structures behind the granting of such additional financial powers have been inadequately articulated. The results have been in the form of reduction in taxes collected, as well as a perceived shrinking of the tax base. These outcomes are posited by us to be due to ignoring the impact of cost of collecting taxes, as well as perverse impacts of devolution of expenditure decisions on local wages and profits. The extant literature has been so far unable to adequately explain the perverse outcomes of devolution especially where reactions to local tax efforts to transfers from the higher level governments are concerned. This paper has attempted to fill this gap. It models and measures the cost of taxation and uses this and the ratio of transfers that augment the local wage rate to those that do not, after controlling for a number of other village level characteristics, to explain tax collected at the local level within a framework that allows for mutual endogeneity of tax collected and transfers. We find that both the cost of tax collection and the ratio of transfers that augment the local wage rate to those that do not have a significant negative effect on tax collection, thus validating the conclusions of the theoretical model developed in this paper. Several policy conclusions are derived.
    Keywords: Devolution, Incentive Effects, Equalizing transfers, Panchayats and Local Government
    JEL: H71 H77
    Date: 2011
  5. By: Goagara, Daniel; Giurca Vasilescu, Laura
    Abstract: From a juridical point of view, an entity is considered in difficulty in the situation of payments’ ceasing that occurs when it can not face its due debts with the available funds. In the case of a financial depreciation, the short term liabilities are superior to the assets. The negative net treasury will put the entity in the situation to come up against the payment incidents, this leading to the degradation of its image for the business partners. Despite this, before closing the synthesis financial statements there are some „alarm signals” which can be highlighted especially through a correct and efficient evaluation. These signals can be analyzed at the level of the main activities from the entity. These reasons determine the analysis of degradation’ stages on the economic-financial situation as an important criterion in choosing the methods of diagnosis for the entities in difficulty, but also for the strategic orientation.
    Keywords: financial degradation; liquidation; evaluation; accounting information
    JEL: M41 O16 G33
    Date: 2011–03–12
  6. By: Akdal, Sinan
    Abstract: This study aims to determine the influence of various firm level characteristics such as, profitability, size, growth opportunities, asset tangibility, non-debt tax shield, volatility and liquidity on capital structure. Employing the cross-sectional data methodology, the researcher examines the capital structure determinants of 202 companies from FTSE 250 for the time period of 2002 – 2009. Seven variables multiple regression models are used to estimate the influence of firm level attributes on capital structure and capital structure is measured simultaneously by the ratios of total debt, long-term debt and short-term debt at both book value and market value of equity. The results obtained from four different regression models show that profitability and liquidity are negatively and significantly related to leverage. Also asset tangibility has a positive relationship with leverage, which is significant. Moreover the researcher finds that total debt ratio at market value of equity is the most important dependent variable as a proxy of capital structure, followed by long-term debt ratio at market value of equity.
    Keywords: Capital structure; leverage; capital structure determinants; firm level characteristics; profitability; size; growth opportunities; asset tangibility; non-debt tax shield; volatility; liquidity
    JEL: O16
    Date: 2010–10–04
  7. By: MIHALACHE, Arsenie-Samoil
    Abstract: National economy and security are fully dependent on information technology and infrastructure. At the core of the information infrastructure society relies on, we have the Internet, a system designed initially as a scientists’ forum for unclassified research. The use of communication networks and systems may lead to hazardous situations that generate undesirable effects such as communication systems breakdown, loss of data or taking the wrong decisions. The paper studies the risk analysis of the accounting information system in modern corporations from the viewpoint of modernising accounting against the background of implementing new information technologies aimed at carrying out the objectives of integration and globalisation construed as phenomena specific to information society and knowledge.
    Keywords: attackers; threats; vulnerability; security; risk analysis
    JEL: H8 P5 D5 L6 L86 M4 C8
    Date: 2011–02–01

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