nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2012‒09‒16
nine papers chosen by
Alexander Harin
Modern University for the Humanities

  1. The need for global adoption and adaptation of International Financial Reporting Standards (IFRS): post Enron consequences and the restoration of confidence to capital markets following the 2008 financial and stock market crises By Ojo, Marianne
  2. The Determinants of VAT Introduction: A Spatial Duration Analysis By Cizek, P.; Lei, J.; Ligthart, J.E.
  3. Tax Policy and Firm Entry and Exit Dynamics: Evidence from OECD Countries By Richard Kneller; Danny McGowan
  4. International Tax Competition and Coordination By Michael Keen; Kai A. Konrad
  5. The effect of effective tax rate differentials and clustering on investment in Belgium By Tim Goesaert
  6. Effective tax rates and measures of business size By Kevin B. Moore
  7. Tax exemptions and rural development: Evidence from a quasi-experiment By Luc Behaghel; Adrien Lorenceau; Simon Quantin
  8. A Model of Tradeable Capital Tax Permits By Timothy P. Hubbard; Justin Svec
  9. Bargaining over Tax Information Exchange By May Elsayyad

  1. By: Ojo, Marianne
    Abstract: Many questions have been raised as to whether financial accounting has become more conservative. The value relevance and qualitative characteristics of accounting information have become topics of particular relevance given the role they have assumed in influencing the value judgment of investors (local or international) in deciding whether or not to invest in a certain market. Given the quality of accounting information – which has resulted in misleading and inaccurate information (amongst many other low quality attributes), it became evident, particularly following Enron's collapse, to adopt improved, enhanced, better quality standards: namely, International Financial Reporting Standards. This paper considers the background culminating in the adoption of IFRS – as well as the need for the adoption of IFRS. It also highlights why the value relevance of accounting information is also of vital significance in certain emerging economies and why the successful implementation of IFRS in these jurisdictions may be crucial in restoring investor confidence – particularly in the aftermath of stock market crashes in these economies.
    Keywords: value relevance; conservatism; capital markets; transparency; disclosure; comparability; consistency; accounting information; IFRS adoption ; mark to market accounting; IAS 32; IAS 39; financial instruments; fair value accounting; off balance sheet instruments
    JEL: K2 E0 D8 M4 C2 G01
    Date: 2012–09–08
  2. By: Cizek, P.; Lei, J.; Ligthart, J.E. (Tilburg University, Center for Economic Research)
    Abstract: Abstract: The spatial survival models typically impose frailties, which characterize unobserved heterogeneity, to be spatially correlated. This specification relies highly on a pre-determinate covariance structure of the errors. However, the spatial effect may not only exist in the unobserved errors, but it can also be present in the baseline hazards and the dependent variables. A new spatial survival model with these three possible spatial correlation structures is explored and used to investigate the determinants of value-added tax implementation in 92 countries over the period 1970–2008 using the proposed model. The estimation results suggest the presence of a significant copycat effect among neighboring countries for both contiguity and distance weight matrices.
    Keywords: Spatial duration;MCMC;Metropolis-Hastings algorithm;Value-added tax.
    JEL: C11 C23 C41 H20 H70
    Date: 2012
  3. By: Richard Kneller (University of Nottingham); Danny McGowan (Bangor Business School)
    Abstract: In this paper we study the effects of reforms to corporate and personal income taxation on the rate of firm entry and exit using industry data for 19 OECD countries from 1998 to 2005. Using a difference-in-differences approach to correct for endogeneity bias we find that increases in corporate taxation affect entry but not exit. The effects of personal taxation depend upon the marginal tax rate that is altered. Increases in marginal tax rates applied at low income levels negatively affect entry and positively affect exit, whereas marginal tax reforms at higher income levels have the opposite effect.
    Keywords: income taxation; firm entry; firm exit; difference in differences
    JEL: D22 H2 H32 L26
    Date: 2012–04
  4. By: Michael Keen; Kai A. Konrad
    Abstract: This paper aims to provide a comprehensive survey of the theory of international tax competition. Starting with the standard framework, it visits the non-cooperative equilibrium of tax competition, analyses aspects of partial and regional coordination, repeated interaction, stock-flow-effects, agglomeration effects and time consistency issues in dynamic models. We discuss profit shifting in the Keen-Kanbur model and then survey frameworks to analyze countries’ bidding for firms, tax rate differentiation and preferential tax regimes, the role of information exchange and recent work on tax havens. The paper also discusses approaches that replace the benevolent government assumption by selfish (Leviathan) governments or by political processes that determine countries' decisions on their tax policy in an international context.
    Keywords: International taxation, tax competition
    Date: 2012–06
  5. By: Tim Goesaert
    Abstract: This paper looks at the effect of agglomeration economies on the tax sensitivity of investments in Belgian firms using detailed firm-level data. We find a negative effect of taxation on investment. However, this is dampened by the presence of agglomeration externalities. Our results hint to the importance of local labor market and supplying industries for firm investment decisions and follow the more nuanced view on tax competition of the New Economic Geography models.
    Date: 2012
  6. By: Kevin B. Moore
    Abstract: This paper uses data from the Survey of Consumer Finances (SCF) and the NBER TAXSIM model to estimate marginal and average tax rates for households that own businesses that are pass-thru entities. We examine how marginal and average tax rates vary by the size of business using four different measures of the size: net income, gross receipts, business value, and number of employees. The analysis also uses the long-time series of SCF cross-sections to examine how tax rates for business owners have evolved over the various changes in tax policy of the last two decades.
    Date: 2012
  7. By: Luc Behaghel (PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - Ecole des Ponts ParisTech - Ecole Normale Supérieure de Paris - ENS Paris - INRA, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, CREST - Centre de Recherche en Économie et Statistique - INSEE - École Nationale de la Statistique et de l'Administration Économique); Adrien Lorenceau (PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - Ecole des Ponts ParisTech - Ecole Normale Supérieure de Paris - ENS Paris - INRA, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris); Simon Quantin (INSEE - Institut National de la Statistique et des Etudes Economiques - INSEE)
    Abstract: This paper provides quasi-experimental (RDD) estimates of the impact of a tax credit program targeted at less densely populated areas. The program was launched in the mid 1990s in rural France and includes corporate and payroll tax exemptions. Variations over time and across rm types allow un-bundling the overall program impact into three components: a quite restrictive, short-term (1-year) payroll tax exemption on new hires; permanent payroll tax exemptions in the non-pro t sector; and corporate tax exemptions for new rms. We nd no signi cant impact of the program on total employment or the number of plants, and no impact of the di erent program components on targeted subsets of rms. Large positive e ects can be statistically rejected.
    Keywords: Tax exemptions ; Rural Development ; Enterprise Zones
    Date: 2012–09
  8. By: Timothy P. Hubbard (Department of Economics, Colby College); Justin Svec (Department of Economics, College of the Holy Cross)
    Abstract: Standard models of horizontal strategic capital tax competition predict that, in a Nash equilibrium, tax rates are inefficiently low due to externalities - capital infl ow to one state corresponds to capital out ow for another state. Researchers often suggest that the federal government impose Pigouvian taxes to correct for these effects and achieve efficiency. We propose an alternative incentive-based regulation: tradeable capital tax permits. Under this system, the federal government would require a state to hold a permit if it wanted to reduce its capital income tax rate from some pre-determined benchmark. These permits would be tradeable across states. We show that, if the federal government sets the correct number of total permits, then social efficiency is achieved. We discuss the advantages of this system relative to the canonical suggestion of Pigouvian taxes.
    Keywords: tax competition; marketable permits; asymmetric states
    JEL: H25 H42 H70
    Date: 2012–09
  9. By: May Elsayyad
    Abstract: This paper empirically studies recent treaty signings between tax havens and OECD countries as the outcome of a bargaining process over treaty form. Havens can decide not to sign an agreement, to sign a tax information exchange agreement or to sign a double taxation convention. We use a highly stylized bargaining model to develop testable hypotheses with regards to the type of agreement signed. We show that the main determinants of treaty signing are a haven's bargaining power and good governance. We show that it is easier to renegotiate an already existent treaty to include information exchange than to pressure countries with no existent agreement.
    Date: 2012–02

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