nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2011‒06‒11
five papers chosen by
Alexander Harin
Modern University for the Humanities

  1. The Tax Benefit of Income Smoothing By Rydqvist, Kristian; Schwartz, Steven; Spizman, Joshua
  2. Corporate taxes and the location of intellectual property By Griffith, Rachel; Miller, Helen; O'Connell, Martin
  3. Economic Effects of Financing Public Pension Plans from Tax Revenue (Japanese) By HASHIMOTO Kyoji; KIMURA Shin
  4. Evaluation of the Risks of Collective Dominance in the Audit Industry in France By Billard, Olivier; Ivaldi, Marc; Mitraille, Sebastien
  5. Fundraising Behaviors of Listed Companies in Vietnam: An Estimation of the Influence of Government Ownership By Okuda, Hidenobu; Nhung, Lai Thi Phuong

  1. By: Rydqvist, Kristian; Schwartz, Steven; Spizman, Joshua
    Abstract: A worker can contribute pre-tax dollars to a private pension plan. Under a progressive tax, this feature reduces income taxes. Ippolito (1986} argues that an individual in 1979 can reduce lifetime taxes by 20%. We re-examine his analysis using the complete time-series of US income tax history and find that the tax benefit of income smoothing is much smaller.
    Keywords: income tax history; private pensions; tax progressivity
    JEL: D91 G11 G18 G23 H24
    Date: 2011–06
  2. By: Griffith, Rachel; Miller, Helen; O'Connell, Martin
    Abstract: The literature suggests that tax rates on mobile activities should fall to zero. Intellectual property is very mobile and has grown in importance. Firms can use intellectual property to shift income offshore and reduce their corporate income tax liability. Yet most intellectual property is held in relatively high tax countries. We estimate the impact of corporate taxes on where firms hold patents. We consider domestic and international taxes, and control for the potential non-tax costs and benefits associated with different locations. We allow heterogeneity across industries, firm size and, most importantly, unobservable patent specific heterogeneity in the responsiveness of patent location to tax. Our results suggest that, on average, corporate tax rates have a negative impact on the likelihood of a firm choosing a location, and that there is substantial heterogeneity in responses. We simulate the impact of recent reforms that apply a lower tax rate to patent income, finding that they attract patent income but result in losses in government revenues.
    Keywords: corporate tax; intellectual property; multinational firms; Patent Box
    JEL: F21 F23 H3 O3
    Date: 2011–06
  3. By: HASHIMOTO Kyoji; KIMURA Shin
    Abstract: This paper summarizes the literature on financing Japanese public pension plans from tax revenue and simulates the economic effects of financing from tax revenue in the short and long terms. From our analysis for the short term, we have found that financing the basic pension from consumption tax will likely lower the household welfare level compared with financing from social insurance premiums. This is because the excess burdens generated by social insurance premiums, which are imposed on labor, are lighter than excess burdens from consumption tax if the supply of labor is mostly fixed. In the long term, financing public pension plans from consumption tax will help achieve higher economic growth rates than financing from social insurance premiums, which are imposed on income, but will curb consumption by those generations still working and will lower the welfare level. Japan should also avoid depending solely on consumption tax for financing public pension plans from tax revenue because of the regressive nature of the tax.
    Date: 2010–07
  4. By: Billard, Olivier; Ivaldi, Marc; Mitraille, Sebastien
    Abstract: The financial crisis drew attention to the crucial role of transparency and the independence of financial certification intermediaries, in particular, statutory auditors. Now any anticompetitive practice involving coordinated increases in prices or concomitant changes in quality that impacts financial information affects the effectiveness of this intermediation. It is therefore not surprising that the competitive analysis of the audit market is a critical factor in regulating financial systems, all the more so as this market is marked by various barriers to entry, such as the incompatibility of certification tasks with the preparation of financial statements or consulting, the expertise on (and the ability to apply) international standards for the presentation of financial information, the need to attract top young graduates, the prohibition of advertising, or the two-sided nature of this market where the quality of financial information results from the interaction between the reputation of auditors and audited firms. Against this backdrop, we propose a legal and economic study of the risks of collective dominance in the statutory audit market in France using the criteria set by Airtours case and, in particular, by analyzing how regulatory obligations incumbent on statutory auditors may favour the appearance of tacit collusion. Our analysis suggests that nothing prevents collective dominance of the auditors of the Big Four group in France to exist, which is potentially detrimental to the economy as a whole as the audit industry may fail to provide the optimal level of financial information.
    Keywords: Airtours criteria; audit industry; collective dominance
    JEL: D43 M42
    Date: 2011–06
  5. By: Okuda, Hidenobu; Nhung, Lai Thi Phuong
    Abstract: This study investigates the capital structure and investment activities of listed companies on the Hanoi Securities Exchange and the Ho Chi Minh Securities Exchange in Vietnam. Estimation analysis using panel data covering the four-year period 2006-2009 revealed the following results. (1) Standard corporate financing theories such as trade-off theory and agency cost theory could be appropriate for explaining the capital structure of listed companies in Vietnam. (2) Compared to the fundraising activities of the companies analyzed by Nguyen (2006) and Biger et al. (2008), the fundraising activities of the listed companies were better explained by standard agency cost theory. (3) There are differences between the determinants of long-term fundraising and short-term fundraising of listed companies in Vietnam. (4) The fundraising determinants of state-controlled companies are different from those of other companies; state-controlled companies have an advantage in tapping external debt funds, and their incentive to reduce their tax payments by debt financing is weaker. (5) The companies listed on the Ho Chi Minh Securities Exchange depended less on debt financing than those listed on the Hanoi Securities Exchange. (6) Listed companies in Vietnam face weak incentives to reduce their tax payments by debt financing because the effective corporate tax rate is low. These results imply that the economic reforms (“Doi Moi”) implemented by the Vietnamese government, which aims to create an economic system based on market mechanisms, have achieved some of their goals in terms of fund mobilization and corporate financing. However, our estimation study illustrates several limitations of economic reforms, such as the opaque relationship between state-controlled companies and government banks, financial restrictions on investment activities, and inactive investment of companies that are state-controlled or listed on the Ho Chi Minh Securities Exchange.
    Keywords: Corporate Finance, Capital Structure, Transition Economy, Vietnam
    JEL: G32 G34 G38
    Date: 2011–03

This nep-acc issue is ©2011 by Alexander Harin. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.