nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2011‒04‒02
eight papers chosen by
Alexander Harin
Modern University for the Humanities

  2. Taxing Financial Transactions: Issues and Evidence By Thornton Matheson
  3. Investment Risk, Pareto Distribution, and the Effects of Tax By NIREI Makoto
  4. Economic integration, tax erosion, and decentralisation: an empirical analysis By Francesca Gastaldi; Paolo Liberati; Antonio Sciala'
  5. Accounting for Customers: The Impact of Contextual Factors and Implications for Management Decision-Making By Lisa McManus
  6. Sales tax competition and a multinational with a decreasing marginal cost By Alexei Alexandrov; Özlem Bedre-Defolie
  7. The Evolution of Income Concentration in the Swiss Federalism over the Twentieth Century By Christoph A. Schaltegger; Christoph Gorgas
  8. Financial Regulatory Harmonization in East Asia: Balancing Domestic and International Pressures for Corporate Governance Reforms By Carney, Richard W.

  1. By: Jaan Masso; Jaanika Meriküll; Priit Vahter
    Abstract: Systems of profit taxation are undergoing continuous change and are subject to numerous studies. This paper estimates the effect of the corporate tax reform in Estonia in the year 2000, a reform that was unique anywhere. This reform nullified the taxation of retained earnings and retained the corporate income tax only on distributed profits. We estimate the effect of the reform on firms’ capital structure, liquidity, investments and productivity. The effect of the reform is identified by comparing the performance of Estonian firms that were affected with that of firms from Latvia and Lithuania, the two other Baltic states, which are economically fairly similar to Estonia and have correlated business cycles. We use firm-level financial data and the difference in differences and propensity score matching methods for our analysis. The results show that the corporate tax reform has resulted in increased holdings of liquid assets and lower use of debt financing; these results can be seen especially among the smaller companies affected by the liquidity constraints. These developments have contributed positively to firms’ survival during the recent global economic crisis. A positive effect on investment and labour productivity has also been found, especially among companies in the services sector. The results imply that distributed profit taxation schemes may have significant positive effects on economic development and firms’ survival.
    Keywords: corporate income tax, capital structure, liquidity, investments, productivity, comparative economic development
    JEL: H25 H32 O16
    Date: 2011
  2. By: Thornton Matheson
    Abstract: In reaction to the recent financial crisis, increased attention has recently been given to financial transaction taxes (FTTs) as a means of (1) raising revenue for a variety of possible purposes and/or (2) helping to curb financial market excesses. This paper reviews existing theory and evidence on the efficacy of an FTT in fulfilling those tasks, on its potential impact, and on key issues to be faced in designing taxes of this kind.
    Keywords: Cross country analysis , Economic models , Financial assets , Financial sector , Group of Twenty , Revenue measures , Securities markets , Stock markets , Tax rates , Taxation , Taxes ,
    Date: 2011–03–11
  3. By: NIREI Makoto
    Abstract: This paper investigates the effects of taxation on the distributions of income and wealth and on the welfare of heterogeneous households. I first demonstrate that the tails of income and wealth distributions converge to a Pareto distribution in a Bewley model in which households bear idiosyncratic investment shocks. This result extends the previous analysis in Nirei (2009). Thereafter, a non-distortionary tax and flat-rate taxes on capital income and consumption are introduced, and their impacts on aggregate wealth, the inequality index, households' welfare, and transition paths are quantitatively investigated. When the tax rate is set to generate the same GDP-government expenditure ratio, the model with capital tax generates smaller aggregate wealth and a smaller inequality index than the case with consumption tax or non-distortionary tax.
    Date: 2011–03
  4. By: Francesca Gastaldi (University of Roma Sapienza); Paolo Liberati (University of Roma Tre); Antonio Sciala' (University of Roma Tre)
    Abstract: This paper addresses the issues of whether and how the degree of economic integration may affect central government tax revenues and the intensity of decentralisation. To this purpose, we empirically test the direct impact of economic integration on central tax revenues using the concept of implicit tax rates (ITRs) updated to take into account mobile and immobile capital taxation. On this basis we derive a country-specific measure of tax erosion that is used as a determinant of the decentralisation of the public sector in an Arellano-Bond environment. We find that: i) an increase of economic integration generates a downward pressure on ITRs on mobile capital, which is growing at increasing rates as far as economic integration increases; ii) the process of tax erosion gives rise to a corresponding process of increasing public sector decentralisation.
    Keywords: Economic integration, Fiscal federalism, Tax competition.
    JEL: H77 H87 F20
    Date: 2011–01
  5. By: Lisa McManus
    Keywords: Customer accounting, Management decision making, Field study, Industry characteristics, Organisational characteristics
    Date: 2011–01
  6. By: Alexei Alexandrov (Simon Graduate School of Business, University of Rochester); Özlem Bedre-Defolie (ESMT European School of Management and Technology)
    Abstract: We examine a multinational firm which has a decreasing marginal cost, and the optimal sales tax policies of the regions where that firm operates. We show that the regions set higher sales taxes than those given by a cooperative equilibrium. Each region fails to fully internalize the effects of its tax level on another region's welfare and the incentives for that region's authority. Exponential cost functions which exhibit economies of scale (for example Cobb-Douglas) and linear demand functions satisfy our assumptions. Our results suggest the need to coordinate sales tax levels between countries and between smaller entities, like states in the United States. Smaller regions benefit more from such coordination. Lowering sales taxes in each region increases welfare for all regions, profits for firms, and consumer welfare.
    Keywords: tax competition, sales taxes, multinationals, decreasing marginal cost, economies of scale
    JEL: F12 F23 H25 H71
    Date: 2011–03–24
  7. By: Christoph A. Schaltegger; Christoph Gorgas
    Abstract: We study the income concentration in the Swiss federalism over the 20th century using the federal income tax statistics. While top-incomes in Switzerland as a whole evolved rather constantly across different income shares, the picture is much more heterogeneous on the subfederal level for the 26 cantons. Some cantons have a secular downward trend, others show a fall and rise of top incomes over the century as exemplified by Kuznets’ hypothesis, some develop rather constantly and even some cantons perceive a striking upward trend. Since Swiss cantons are fiscally rather autonomous, our homogeneous database serves as a basis for an analysis of the long term effects of tax competition on income concentration.
    Keywords: Income inequality; Top incomes; Taxation
    JEL: D31 H2 N3
    Date: 2011–03
  8. By: Carney, Richard W. (Asian Development Bank Institute)
    Abstract: Is the harmonization of financial regulatory regimes possible in East Asia? Focusing on corporate governance, which many see as a critical part of the 1997 Asian financial crisis, and which is also seen as unresponsive to calls for change, this paper argues that such harmonization is possible, but that it will not be according to the “best practices” advocated by the International Monetary Fund, World Bank, Organisation for Economic Co-operation and Development, and other international organizations. At present, actors generally feign compliance with these international rules and standards. But this creates potential long-term problems by allowing distortions to persist and accumulate over time. By identifying the key actors that determine regulatory outcomes, this paper points to an alternative regulatory framework that would be adopted more comprehensively. This alternative framework is a compromise between the “best practices” advocated by international organizations, and the domestic political realities of East Asia.
    Keywords: financial regulatory regimes; financial regulation; harmonization financial regulation; corporate governance
    JEL: G32 G34 G38 P48
    Date: 2011–03–20

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