nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2012‒11‒03
eight papers chosen by
Alexander Harin
Modern University for the Humanities

  1. Tax Evasion and Optimal Environmental Taxes By Liu, Antung Anthony
  2. El Tax Credits Response to Tax Enforcement: Evidence from a Quasi-Experiment in Chile By Claudio Agostini
  3. An Empirical Investigation into the Design of an EU Apportionment Formula Related to Profit Generating Factors By A. ROGGEMAN; I. VERLEYEN; P. VAN CAUWENBERGE; C. COPPENS
  4. Tax capacity and tax effort : extended cross-country analysis from 1994 to 2009 By Le, Tuan Minh; Moreno-Dodson, Blanca; Bayraktar, Nihal
  5. Fiscal Incentives and Environmental Infrastructure in China By Liu, Antung Anthony; Zhang, Junjie
  6. Tax Multipliers: Pitfalls in Measurement and Identification By Daniel Riera-Crichton; Carlos A. Vegh; Guillermo Vuletin
  7. L’impact de la présence des comités d’audit sur la performance financière des entreprises tunisiennes By Bouaziz, Zied; Triki, Mohamed
  8. “Financial constraints to enterprise investments: an international analysis on financial accounts of OECD countries” By Cinquegrana, Giuseppe; De Rita, Paola

  1. By: Liu, Antung Anthony (Resources for the Future)
    Abstract: This paper introduces a new argument to the debate about the role of environmental taxes in modern tax systems. Some environmental taxes, particularly taxes on gasoline or electricity, are more difficult to evade than taxes on labor or income. When the tax base is shifted in a revenue-neutral manner toward these environmental taxes, the result is a net reduction in the amount of tax evasion. Using a carbon tax as a motivating example, the "tax evasion effect" is shown to sharply reduce the welfare cost of controlling emissions. A simple computable general equilibrium model suggests that the impact of considering tax evasion can be large: costs are lowered by 28 percent in the United States, by 89 percent in China, and by 97 percent in India. In countries with high levels of pre-existing tax evasion, a carbon tax will pay for itself through improvements in the efficiency of the tax system.
    Keywords: environmental regulation, Pigouvian tax, tax evasion, green tax swap, tax interactions
    JEL: H21 H26 Q53 Q54
    Date: 2012–09–14
  2. By: Claudio Agostini (Escuela de Gobierno, Universidad Adolfo Ibáñez)
    Abstract: Diesel in Chile receives a different tax treatment depending on its use. If diesel is used in industrial activities the diesel taxes paid can be fully used as a credit against VAT, but if it is used in freight or public transportation (basically trucks and buses) only a fraction of diesel taxes paid can be used as a credit against VAT. As a result of this different tax treatment firms have incentives to use “tax exempted” diesel in activities requiring “non tax exempted” diesel. This tax wedge therefore generates and opportunity for tax evasion. In this paper we analyze the impact of a tax enforcement program implemented by the Chilean IRS, where letters requiring information about diesel tax credits were sent to around 200 firms in 2003. Using different empirical strategies to consider the non-randomness of the selection of firms, we find that firms receiving a letter decreased their diesel tax credits by around 11%.
    Date: 2012–01
    Abstract: The European Commission (EC) has the intention to establish a Common Consolidated Corporate Tax Base, which requires an allocation formula to fairly distribute the consolidated tax base among all group entities. A fair distribution would mean that the allocation is closely related to the profit generating factors of the underlying entities. The EC supposes that fixed tangible assets, sales and labour are the dominant factors in the generation of profit. This paper analyses the profit generating capacity of these factors and of the alternative factor intangible assets. The results show that the proposed factors only explain 28% of the variation in profit. Moreover, the results indicate that recognized intangibles do not increase R2 significantly. However, for R&D intensive companies, adding the market less book value to proxy for unrecognized intangibles, increases the explanatory power with 30%. This suggests that for these companies unrecognized intangibles could be important in generating profit.
    Keywords: CCCTB, apportionment formula, fairness, international corporate taxation, European Union
    JEL: D63 F23 H25 H87
    Date: 2012–09
  4. By: Le, Tuan Minh; Moreno-Dodson, Blanca; Bayraktar, Nihal
    Abstract: One of the important factors for economic development is the existence of an effective tax system. This paper deals with the concept and empirical estimation of countries'taxable capacity and tax effort. It employs a cross-country study from a sample of 110 developing and developed countries during 1994-2009. Taxable capacity refers to the predicted tax-to-gross domestic product ratio that can be estimated empirically, taking into account a country's specific macroeconomic, demographic, and institutional features, which all change through time. Tax effort is defined as an index of the ratio between the share of the actual tax collection in gross domestic product and taxable capacity. The use of tax effort and actual tax collection benchmarks allows the ranking of countries into four different groups: low tax collection, low tax effort; high tax collection, high tax effort; low tax collection, high tax effort; and high tax collection, low tax effort. The analysis provides broad guidance for tax reforms in countries with various levels of taxable capacity and revenue intake.
    Keywords: Taxation&Subsidies,Subnational Economic Development,Debt Markets,Emerging Markets,Economic Theory&Research
    Date: 2012–10–01
  5. By: Liu, Antung Anthony (Resources for the Future); Zhang, Junjie
    Abstract: This paper provides evidence that China's system of tax revenue sharing is an important explanation for differences in the rate of sewage treatment plant construction among its cities. As a result of the 1994 tax reform, Chinese cities retained different shares of their value-added tax (VAT). Exploiting the persistence of this sharing system, we use the VAT share in 1995 as an instrument for the present fiscal incentives. We find that a 10 percentage point increase in the VAT sharing rate resulted in a 13.8 percent increase in the construction of sewage treatment capacity. This result suggests that fiscal incentives can play an important role in the provision of pollution-reducing infrastructure.
    Keywords: sewage, water pollution, China pollution, fiscal federalism, tax sharing, tax federalism, China VAT sharing
    JEL: H4 H54 H77 Q53 Q56
    Date: 2012–09–21
  6. By: Daniel Riera-Crichton; Carlos A. Vegh; Guillermo Vuletin
    Abstract: We contribute to the literature on tax multipliers by analyzing the pitfalls in identification and measurement of tax shocks. Our main focus is on disentangling the discussion regarding the identification of exogenous tax policy shocks (i.e., changes in tax policy that are not the result of policymakers responding to output fluctuations) from the discussion related to the measurement of tax policy (i.e., finding a tax policy variable under the direct control of the policymaker). For this purpose, we build a novel value-added tax rate dataset and the corresponding cyclically-adjusted revenue measure at a quarterly frequency for 14 industrial countries for the period 1980-2009. We also provide complementary evidence using Romer and Romer (2010) and Barro and Redlick (2011) data for the United States. On the identification front, our findings favor the use of narratives à la Romer and Romer (2010) to identify exogenous fiscal shocks as opposed to the identification via SVAR. On the (much less explored) measurement front, our results strongly support the use of tax rates as a true measure of the tax policy instrument as opposed to widely-used, revenue-based measures, such as cyclically-adjusted revenues.
    JEL: E32 E62 F3 H20
    Date: 2012–10
  7. By: Bouaziz, Zied; Triki, Mohamed
    Abstract: The Audit Committee plays a crucial role in protecting the interests of shareholders and other stakeholders. In fact, its effectiveness is dependent on its characteristics that relate primarily to the independence of its members, the size of the committee, the frequency of meetings and the expertise of the members of the audit committee. Indeed, we have tried to capture the effect of the characteristics of the audit committee on financial performance measured by Return On Assets (ROA) and Return On Equity (ROE). To test the validity of our hypothesis, which states the existence of a certain determinism characteristic of the audit committee on financial performance measured by ROA and ROE, we have developed two models of linear regressions. In the same furrow, we examine the effect of audit committee characteristics at each of the endogenous variables taking into account the impact of firm size and the level of debt. Our empirical validation was conducted on a sample of 26 Tunisian firms listed on the stock exchange in Tunis (Tunis Stock Exchange) over a period which lasts 4 years (2007-2010). The estimated models show satisfactory results showing the importance of the impact of the characteristics of the audit committee on the financial performance of Tunisian companies.
    Keywords: Audit Committee - independent members of the audit committee - frequency of meetings - Return on Assets - Return on Equity
    JEL: G38
    Date: 2012–10–15
  8. By: Cinquegrana, Giuseppe; De Rita, Paola
    Abstract: Since the ’80s, economic literature has stressed the importance of external financing on enterprises’ investment decisions; in particular the pecking order theory highlighted the existence of a hierarchy of financing sources, an approach that originates from the existence of asymmetric information between fund borrowers and lenders. The presence of effective financial constraints to the realisation of investments of productive units was reasserted in the work by Fazzari, Hubbard and Petersen (1988), which was followed by ample empirical and theoretical analysis of enterprises’ information opacity, of the consequent effects on access to external financing and of the lower cost of financing originating from internal cash flows generated by enterprise management. The present contribution delves into the analysis of the possible existence of financial constraints to enterprises’ investment decisions in different OECD countries, using as analytical tools the indicators of the composition of financial instruments within the liabilities and the net lending-net borrowing for the sector of non-financial corporations. The sources of information are OECD databases on financial and nonfinancial accounts per institutional sector.
    Keywords: information asymmetries; financial constraints; enterprises; financial accounts; liabilities; corporate investments; net lending-net borrowing
    JEL: G15
    Date: 2012–09–25

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