nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2011‒05‒24
eight papers chosen by
Alexander Harin
Modern University for the Humanities

  1. Economic Consequences of Fair Value Accounting and a Change in the Distribution Rule By Kochiyama, Takuma
  2. Funding in Public Sector Pension Plans: International Evidence By Eduard Ponds; Clara Severinson; Juan Yermo
  3. Market Segments and Farmer Preferences for Financial Record Systems By Wolf, Christopher A.; Lupi, Frank; Harsh, Stephen A.
  4. Explicating Corruption and Tax Evasion:Reflections on Greek Tragedy By Anastasia Litina; Theodore Palivos
  5. Wie können Unternehmen mit steuerlichen Verlustvorträgen identifiziert werden? Ergebnisse einer Replikationsstudie By Niemann, Rainer; Rechbauer, Martina
  6. Entrepreneurial innovations and taxation By Haufler, Andreas; Norbäck, Pehr-Johan; Persson, Lars
  7. Suggestions for reforming the governance of global accounting standards By Nicolas Véron
  8. Should Japanese Tax System Be More Progressive? By Shun-ichiro Bessho; Masayoshi Hayashi

  1. By: Kochiyama, Takuma
    Abstract: This research examines the economic consequences of fair value accounting and a change in the distribution rule. In Japan, fair value accounting for financial instruments was mandated from 2001, and unrealized revaluation profits were to be included in income statements. As an institutional correspondence to the change in accounting standards, Japanese Commerce Law implemented the deduction of revaluation profits from distributable profits. However, from 2006, the Japanese Company Act changed its distribution rule to include revaluation profits in distributable profits. Utilizing such a unique institutional setting, I investigated whether fair value adjustments are related to dividends and whether the change in the distribution rule had an impact on companies' dividend policies. The results show that the change in the distribution rule influenced companies' dividend policies, especially Japanese firms, as they tend to pay out revaluation profits as allowed by the Company Act.
    Keywords: fair value accounting, dividend policy, earning persistence, distribution rule
    Date: 2011–05
  2. By: Eduard Ponds; Clara Severinson; Juan Yermo
    Abstract: Most countries have separate pension plan for public sector employees. The future fiscal burden of these plans can be substantial as the government usually is the largest employer, pension promises in the public sector tend to be relatively generous, and future payments have to be paid out directly from government revenues (pay-as-you-go) or by funded plans (pension funds) which tend to be underfunded. The valuation and disclosure of these promises in some countries lacks transparency, which may be hiding potentially huge fiscal liabilities that are being passed on to future generations of workers.<p> In order to arrive at a fair comparison between countries regarding the fiscal burden of their DB public sector pension plans, this paper gathers more evidence on public sector pension plans regarding the type of pension promise and quantifies the future tax burden related to these pension promises. The reported liabilities are recalculated using both a fair value approach (local market discount rates) and a common, fixed discount rate across all countries which reflects projected growth in national income. We also estimate for a number of plans from a sample of OECD countries the size of the net unfunded liabilities in fair value terms as of the end of 2008. This fiscal burden can also be interpreted as the implicit pension debt in fair value terms.
    Keywords: pension fund, funding, defined benefit, fair value, hybrid plans, public sector pensions, actuarial evaluation
    JEL: G23 H55 H75 H83 J32
    Date: 2011–05
  3. By: Wolf, Christopher A.; Lupi, Frank; Harsh, Stephen A.
    Keywords: farm management, accounting systems, Farm Management,
    Date: 2011
  4. By: Anastasia Litina (Department of Economics, University of Ioannina); Theodore Palivos (Department of Economics, University of Macedonia)
    Abstract: Do developed countries experience extensive corruption and if so how should they treat it? Evidence from countries in which tax evasion and various forms of corruption coexist and interact (e.g. Greece) indicates that the answer is positive. We address this problem by constructing an overlapping generations model com- prising two distinct groups of agents, citizens and politicians. Citizens decide the fraction of their income that they report to the tax authorities. Politicians decide the fraction of the public budget that they peculate. In such a context, multiple self-ful?lling equilibria can emerge: a "good"("bad") equilibrium with low (high) corruption and high (low) level of spending on education. It is shown that standard deterrence policies (e.g., fines) cannot eliminate multiplicity. Interestingly, whenever corruption may corrupt, policies that impose a strong moral cost on tax evaders and corrupt politicians can lead to a unique equilibrium.
    Keywords: Corruption, Tax Evasion, Multiple Equilibria, Stigma.
    JEL: D73 E62 H26
    Date: 2011–05
  5. By: Niemann, Rainer; Rechbauer, Martina
    Abstract: Für die Wirkungsweise steuerlicher Anreize ist die Forschungsfrage, ob sich Unternehmen mit und ohne steuerliche Verlustvorträge in Entscheidungsprozessen wie der Investitions- und Finanzierungspolitik voneinander unterscheiden, von besonderer steuerpolitischer Relevanz. Die Identifikation von Unternehmen mit steuerlichen Verlustvorträgen erfolgt in der empirischen Steuerforschung typischerweise anhand von datenbankgestützten Verfahren. Im vorliegenden Beitrag wird die Trennschärfe derartiger Methoden untersucht. Für eine Stichprobe österreichischer Aktiengesellschaften wird dabei der Steuerstatus nach verschiedenen Verfahren ermittelt und mit dem tatsächlichen Steuerstatus der Unternehmen im Jahr 2007 verglichen. Die Ergebnisse der Untersuchung zeigen, dass die in der empirischen Steuerforschung angewandten Identifikationsmethoden substanzielle Verlustvorträge präziser identifizieren können als das einfache Vorhandensein von positiven Verlustvorträgen. Generell ist die Trennschärfe der Verfahren jedoch als gering einzustufen. -- From a tax policy perspective, it is an important research question whether corporations with and without tax loss carry-forwards behave differently with regard to investment and financing decisions. In empirical tax research, firms with tax loss carry-forwards are commonly identified by using database-driven methods. This paper examines the accuracy of these methods by using a sample of Austrian public limited companies in 2007. We analyze to what extent the estimated tax status corresponds to the firms' actual tax status. Our results show that database-driven methods are more accurate in identifying substantial tax loss carryforwards than in identifying the existence of mere positive loss carry-forwards. However, the methods' general accuracy can be classified as rather low.
    Date: 2011
  6. By: Haufler, Andreas; Norbäck, Pehr-Johan; Persson, Lars
    Abstract: In many countries entrepreneurship is promoted through tax reductions for small businesses and by various government support schemes. We analyze the effects of such policies to subsidize small businesses in a setting where both the risk-return characteristics of the selected innovation project and the mode of commercialization chosen by entrepreneurs (market entry versus sale to an incumbent firm) are endogenous. We show that government programs to support small businesses foster market entry by entrepreneurs but, at the same time, give an incentive to choose low risk projects, due to the existence of limited loss o®set provisions. This points to a basic trade-off be- tween the goals of raising competition in technology-intensive markets and the desire of governments to foster risky `breakthrough' innovations.
    Keywords: business taxation; innovation; market entry
    JEL: H25 L13 M13 O31
    Date: 2011–05
  7. By: Nicolas Véron
    Abstract: Public authorities overseeing the International Financial ReportingStandards (IFRS) Foundation, through the Monitoring Board in place sinceearly 2009, should encourage the Foundation to make itself more directlyaccountable to the global investment community. The Monitoring Board should re-examine its own role, composition andprocesses in the same spirit, one option being its enlargement to includeinvestor representatives, and transformation into a statutory body of theIFRS Foundation. The IFRS Foundationâ??s funding framework should be better aligned with itsgovernance and accountability arrangements.This Policy Contribution is an adaptation of a letter sent on 12 April 2011 fromthe author to the Monitoring Board of the IFRS Foundation, whose members are public authorities including the European Commission, as a response to the public consultation on the Monitoring Boardâ??s Consultative Report on the review of the IFRS Foundationâ??s governance.
    Date: 2011–05
  8. By: Shun-ichiro Bessho; Masayoshi Hayashi
    Abstract: We investigate the effects of marginal changes of marginal tax rates of Japanese income tax system, computing the social marginal costs of public funds (SMCF) generated by marginal increase in tax rates. We use large micro data sets on Japanese households, and estimate a structural discrete choice model of household labor supply. Our estimation results show that the average of total elasticity of males ranges between 0.0276 and 0.0521, and that of female between 0.0429 and 0.2134. Based on the estimated utility functions, we find that SMCF for raising the marginal tax rate applied for those with low- or medium-income level is smaller than those with more income. Our results could suggest Japanese income tax system should be less progressive.
    Keywords: Social marginal cost of public funds, structural discrete choice model, household labor supply
    JEL: H21 H24 H31 J22
    Date: 2011–03

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