nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2011‒08‒09
eleven papers chosen by
Alexander Harin
Modern University for the Humanities

  1. Unternehmensbewertung nach HFA 2/1983: Ausländische Einkünfte, steuerliches Anrechnungsverfahren, Ausschüttungspolitik By Popp, Matthias
  2. On the political economics of tax reforms By Castanheira, Micael; Nicodème, Gaëtan; Profeta, Paola
  3. Fiscal equalization and regions' (un)willingness-to-tax: Evidence from Germany By Bönke, Timm; Jochimsen, Beate; Schröder, Carsten
  4. Tax return as a political statement By Libman, Alexander; Schultz, André; Graeber, Thomas
  5. The Time is Still Right for BC’s HST By Finn Poschmann; Alexandre Laurin
  6. Political Parties and the Tax Level in the American states: A Regression Discontinuity Design By Leandro M. de Magalhães
  7. Marginal tax rates, tax revenues and inequality. Reagan’s fiscal policy By Elena Briata
  8. Auditing, Consulting, and Audit Market Concentration By Christopher Bleibtreu; Ulrike Stefani
  9. Optimal Tax Rules for Addictive Consumption By Bossi, Luca; Calcott, Paul; Petkov, Vladimir
  10. Taxation and Regulation of Bonus Pay By Timothy Besley; Maitreesh Ghatak
  11. Disentangling the Link Between Stock and Accounting Performance in Acquisitions By Andre Betzer; Marc Goergen

  1. By: Popp, Matthias
    Abstract: Bei einer Unternehmensbewertung nach IDW müssen grundsätzlich persönliche Einkommensteuern berücksichtigt werden. Nach dem früheren Anrechnungsverfahren (bis 2000) führten ausländische Einkünfte auf Ebene der Kapitalgesellschaft häufig zu steuerfreien Eigenkapitalzugängen. Bei Ausschüttung an den Anteilseigner unterlagen die Dividenden aber der persönlichen Einkommensteuer. Das Arbeitspapier untersucht, wie unter diesen Bedingungen die Besteuerung sachgerecht bei der Bewertung berücksichtigt werden sollte. -- The German Standard for Business Valuation usually requires allowing for personal income taxes in computing a company value. Until 2000 Germany had a Corporation Tax Imputation System. Foreign income often was tax-exempt on a corporate level, but dividends from that income were taxed by personal income tax. The paper analyzes how taxes should be included in business valuation under these special circumstances to produce adequate results.
    Keywords: Unternehmensbewertung,Bewertungsstandard,international,ausländische Einkünfte,Besteuerung,Einkommensteuer,Körperschaftsteuer,Anrechnungsverfahren,Dividendenpolitik,objektivierter Wert,IDW,Institut der Wirtschaftsprüfer,Business Valuation,Valuation Standard,HFA 2/1983,IDW,Institut der Wirtschaftspruefer,Germany,International,Foreign Income,Taxation,Personal Income Tax,Corporate Income Tax,Corporation Tax Imputation System,Dividend Policy
    JEL: G34 K22 K41 M42
    Date: 2011
  2. By: Castanheira, Micael; Nicodème, Gaëtan; Profeta, Paola
    Abstract: There is often a gap between the prescriptions of an “optimal” tax system and actual tax systems, some of which can be neither efficient economically nor efficient at redistributing income. With a focus on personal income taxes, this paper reviews the political economics literature on tax systems and reforms to see whether political mechanisms allow us to better understand why tax systems look the way they look. Finally, we exploit a database of reforms in labour taxation in the European Union to check the determinants of all reforms, on the one hand, and of targeted reforms, on the other hand. The results fit well with political economy theories and show that political variables carry more weight in triggering reforms than economic variables. This shed light on whether and how tax reforms are achievable. It also explains why many reforms that seem economically optimal fail to be implemented.
    Keywords: personal income tax; political economy; taxation
    JEL: H11 H21 H24 P16
    Date: 2011–08
  3. By: Bönke, Timm; Jochimsen, Beate; Schröder, Carsten
    Abstract: Under cooperative federalism, when an identical tax tariff applies to all regions of a federation, usually redistribution rules are implemented to smooth fiscal differences. The administration of tax collection, however, is sometimes delegated to the regional level, leaving the regional administrations some discretion concerning the auditing of tax returns. Building on a stylized model, we show that under such conditions granted discretionary tax deductions at the level of tax units is positively related to state-specific marginal rates of loss (MRL), i.e., the fraction of an additional tax Euro raised in a region that the fiscal-equalization system redistributes to other jurisdictions. We empirically test the model's presumption using administrative income-tax micro data from Germany. Regression estimates comply with the implications of our model. --
    Keywords: Fiscal federalism,rate of loss,income tax returns
    JEL: C21 H21 H77
    Date: 2011
  4. By: Libman, Alexander; Schultz, André; Graeber, Thomas
    Abstract: The accuracy of a tax return is usually interpreted as an outcome of the tax evasion decision by an individual. However, in non-democratic regimes with predatory blackmail tax systems it is possible that large sums voluntarily reported by influential politicians or businessmen may be used as political statements. By openly acknowledging one's personal income an individual can signal the strength of one's position, or, on the contrary, the submissiveness to the political leadership. In this paper we explore the idea of the tax return as a political statement and test it using a unique dataset of the tax returns filed by the Russian regional governors and the members of their families for the year 2009. Our results conjecture that Russian governors may deliberately file their tax return as a political statement to signal their strength vis-à-vis the central government. --
    Keywords: tax compliance,communication in non-democracies,Russian regions
    JEL: D73 D78 H26 P26
    Date: 2011
  5. By: Finn Poschmann (C.D. Howe Institute); Alexandre Laurin (C.D. Howe Institute)
    Abstract: British Columbia is on the right track with its controversial move to a harmonized sales tax (HST), according to this report. The authors say the shift to a value-added tax mirrors patterns in most of the developed world, and helped move the province from being a high tax, investment-unfriendly jurisdiction, to one which is domestically and internationally competitive – a more attractive home for investment and jobs. Consumption taxes like the HST in BC impose smaller burdens on the economy, per dollar of government revenue, than alternatives such as old-style retail sales taxes or taxes on personal and business incomes. For this and other reasons, conclude the authors, BC residents are well served by the new HST.
    Keywords: Fiscal and Tax Competitiveness, British Columbia (Province), harmonized sales tax (HST)
    JEL: H2 H71
    Date: 2011–06
  6. By: Leandro M. de Magalhães
    Abstract: With a regression discontinuity design I show that the partisan identity of the majority in the state House of Representatives has no causal effect on the tax level. This result goes against recent findings in the political economy literature. In the state Senate I find a significant discontinuity in the tax level, but I also find a discontinuity in the density of the forcing variable - which implies that we can not interpret the discontinuity in the Senate as a causal relation. Another contribution of the paper is to investigate under which conditions slim majorities in the American states (as opposed to close election) are appropriate for a regression discontinuity design.
    Keywords: Regression discontinuity design, Democrats, Republicans, divided government, line item veto, tax level.
    JEL: D72 H1 H2
    Date: 2011–07
  7. By: Elena Briata
    Abstract: The aim of this paper is to provide an overview of Reagan’s fiscal Reform. It mainly involves an investigation of the legislative features of the Reform and of the underpinning economical theory. The study focuses on the impact of such a Reform on the economy. The paper comprises four main parts. The first part is devoted to the analysis of both Reagan’s fiscal policy actions in the 1980s and of the regulatory touch. In particular the first part investigates two main Laws, which reduced private marginal tax rates: the Economic Recovery Tax Act (1981) and the Tax Reform Act (1986). The second part introduces and analyses the so-called “Supply-Side Economics”, the main theory on which Reagan's Reform is based. Indeed the core of “Supply-Side Economics” was the “Laffer Curve” where tax rate cuts played a central role. The last two parts deal with the concrete effects of private marginal tax rate cuts. In particular, inequality and fiscal revenue. It also focuses on the criticisms against the Reform. Fiscal revenue is observed in a wider context. The paper first investigates the source of the deficits recorded during the 1980s. It relates these deficits to general government revenues and general government expenditures. Subsequently, general government revenues are broken down into their parts and the development of federal income tax revenue is carefully observed. Inequality is investigated through the Gini index. The paper touches briefly on the changes to the Gini index after Reagan’s two main fiscal Laws took effect. Furthermore, inequality is related to the progression of the tax system and then calculated through the Reynolds-Smolensky Index.
    Keywords: Reagan’s fiscal policy, supply-side economics, revenue, inequality
    JEL: H24 E62 N42
    Date: 2011–07
  8. By: Christopher Bleibtreu (Department of Economics, University of Konstanz, Germany); Ulrike Stefani (Department of Economics, University of Konstanz, Germany)
    Abstract: In its recently published Green Paper, the European Commission 2010 discusses various methods to enhance the reliability of audits and to re-establish trust in the financial market. The Commission primarily focuses on increasing auditor independence and on reducing the high level of audit market concentration. Based on a model in the tradition of the circular market matching models introduced by Salop 1979, we show that prohibiting non-audit services as a measure intended to improve auditor independence can have counter-productive secondary effects on audit market concentration. In fact, our model demonstrates that incentives for independence and the structure of the audit market are simultaneously determined. Because market shares are endogenous in our model, it is not even clear that prohibiting non-audit services indeed increases an auditor’s incentive to remain independent.
    Keywords: auditing, Audit Fees, Knowledge Spillovers, Audit Market Concentration, Auditor Independence
    JEL: D43 L11 M42
    Date: 2011–08–02
  9. By: Bossi, Luca; Calcott, Paul; Petkov, Vladimir
    Abstract: This paper studies implementation of the social optimum in a model of habit formation. We consider taxes that address inefficiencies due to negative consumption externalities, imperfect competition, and self-control problems. Our contributions are to: i) account for producers’ market power; and ii) require implementation to be robust and time consistent. Together, these features can imply significantly lower taxes. We provide a general characterization of the optimal tax rule and illustrate it with two examples.
    Keywords: dynamic externalities, internalities, addiction, optimal taxation, time consistent implementation,
    Date: 2011–06–23
  10. By: Timothy Besley; Maitreesh Ghatak
    Abstract: We explore the consequence for taxation and regulation of bonus pay when investors are protected by taxpayers from downside risk. The paper develops a model where workers in financial sector firms make decisions about effort and risktaking which are influenced by the structure of bonus pay. Bailouts lead to too little effort, too much risk-taking and increase inequality. We show that the optimal structure of bonuses can be implemented by a combination of a regulation on the structure of bonuses and a tax on their level.
    Date: 2011–07
  11. By: Andre Betzer (University of Wuppertal); Marc Goergen (Cardiff Business School and European Corporate Governance Institute (ECGI))
    Abstract: While empirical studies that use event-study methodology find on average that the gains from mergers and acquisitions are positive, those focusing on accounting figures tend to find a significant drop in performance. We argue that each of the four possible combinations between positive or negative abnormal stock returns and accounting performance is due to a distinct acquisition motive. We find strong empirical evidence in support of this claim.
    Keywords: Mergers and acquisitions, performance measurement, synergies, preemption, overvaluation, corporate governance, agency problems
    JEL: G34 G3 G14
    Date: 2011–07

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