nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2013‒06‒09
thirteen papers chosen by
Alexander Harin
Modern University for the Humanities

  1. Tax and Taxable Capacity: Ireland in Comparative Perspective By Callan, Tim; Savage, Michael
  2. The effect of debt on corporate profitability Evidence from French service sector By Mazen Kebewar; Ahmed Shah Syed Muhammad Noaman
  3. The Effect of Moving to a Territorial Tax System on Profit Repatriations: Evidence from Japan By HASEGAWA Makoto; KIYOTA Kozo
  4. Tax-paying for Fun and Profit By Kunstadt, Robert; Maggioni, Ilaria
  5. Taxes, tax administrative burdens and new firm formation By Braunerhjelm, Pontus; Eklund, Johan E.
  6. Earned income tax credits, unemployment benefits and wages: empirical evidence from Sweden By Bennmarker, Helge; Calmfors, Lars; Larsson Seim, Anna
  7. Emissions trading in China: Principles, design options and lessons from international practice By Frank Jotzo
  8. The Political Economy of Structural Reform and Fiscal Consolidation Revisited By Hans Peter Grüner
  9. Optimal Capital Versus Labor Taxation with Innovation-Led Growth By Philippe Aghion; Ufuk Akcigit; Jesus Fernandez-Villaverde
  10. Inequality and Poverty in the United States: Public Policies for Inclusive Growth By Oliver Denk; Robert Hagemann; Patrick Lenain; Valentin Somma
  11. R&D, Patenting and Growth: The Role of Public Policy By Ben Westmore
  12. Intangible Investment and Firm Value in Japan (Japanese) By TAKIZAWA Miho
  13. Constructing a research network: accounting knowledge in production By Vassili Joannides; Nicolas Berland

  1. By: Callan, Tim; Savage, Michael
    Keywords: taxes/Ireland/Comparative/qec
    Date: 2013–01
  2. By: Mazen Kebewar (LEO - Laboratoire d'économie d'Orleans - CNRS : UMR7322 - Université d'Orléans, Faculty of Economics, Department of Statistics and Management Information Systems - University of Aleppo, Aleppo, Syria); Ahmed Shah Syed Muhammad Noaman (LEO - Laboratoire d'économie d'Orleans - CNRS : UMR7322 - Université d'Orléans)
    Abstract: Current study aims to provide new empirical evidence on the impact of debt on corporate profitability. This impact can be explained by three essential theories: signaling theory, tax theory and the agency cost theory. Using panel data sample of 2240 French non listed companies of service sector during 1999-2006. By utilizing generalized method of moments (GMM) econometric technique on three measures of profitability ratio (PROF1, PROF2 and ROA), we show that debt ratio has no effect on corporate profitability, regardless of the size of company (VSEs, SMEs or LEs).
    Keywords: Debt, GMM, Panel data, Profitability.
    Date: 2013–03–05
  3. By: HASEGAWA Makoto; KIYOTA Kozo
    Abstract: The design of international tax policies, including whether and how to tax corporate incomes earned in foreign countries, has received a great deal of attention from policymakers and economists. The United States taxes foreign source income upon repatriation under the worldwide tax system and has long discussed changing the current corporate tax system to a territorial tax system that exempts foreign income from home taxation. Japan had a worldwide tax system similar to that in the United States, but moved to a territorial tax system by introducing a foreign dividend exemption in April 2009. This paper examines the effect of dividend exemption on profit repatriations by Japanese multinationals. We find that while the dividend exemption system stimulated dividend payments by foreign affiliates on average, their responses to dividend exemption were heterogeneous. Foreign affiliates not paying dividends under the worldwide tax system did not start to do so as a result of the legislation. On the other hand, dividend exemption increased dividend repatriations by foreign affiliates that had paid dividends under the worldwide tax system. We also find that more profitable firms paid larger amounts of dividends under the worldwide tax system and increased dividend payments further in the first year of the new exemption system.
    Date: 2013–05
  4. By: Kunstadt, Robert; Maggioni, Ilaria
    Abstract: Modern advances give us the ability to re-engineer the taxation system to benefit from computerized automation and the insights of modern psychology. People like to do things that bring a tangible reward. Tax-paying should be made FUN, not a chore. You will want to participate if you perceive a direct benefit. This new model selectively adapts the old English system of raising money by granting royal monopolies. A tax-paying entity would be allowed to make a bid on the percentage of tax it would pay for acquiring monopoly rights on a particular venture, posted publicly on a government-auction website for others to see and to post their alternative bids. Proposals put out for bid could immediately be tested for market viability by getting a thumbs-up/thumbs-down from the general public. The rewards to the proposer and to the public can be immediately perceived by all. Hence, the conditions for a positive stimulus-response-reward loop are fulfilled. Tax-paying becomes both fun and profitable, even more gratifying than betting in Las Vegas, because the bidder gets a perceptible benefit from it right away. The advantage to the state and its citizens is that monopoly efficiency does not just serve the monopolist but also the public. The would-be monopolist must make a precise calculation of how much to offer the state in taxes; upon pain of losing the auction to a competitor. With minimal government intervention, the “invisible hand” of economic theory is put to the task of serving the public good. (Journal of Economic Literature (JEL) Classification: H2 - Taxation, Subsidies, and Revenue; H21 - Efficiency; Optimal Taxation; H25 - Business Taxes and Subsidies; H27 - Other Sources of Revenue)
    Keywords: Revenue; Efficiency; Optimal Taxation; Business Taxes; Sources of Revenue; Monopoly; Bid; Bidding; Internet; Automation; Auction; Competition
    JEL: H2 H21 H25 H27
    Date: 2013–05–12
  5. By: Braunerhjelm, Pontus (Entrepreneurship Forum, CESIS, KTH); Eklund, Johan E. (Entrepreneurship Forum, JIBS)
    Abstract: This paper examines the tax administrative burden and its effect on new firm formation. It is well recognized that entrepreneurship and new firm formation are critical factors in determining economic growth and development. New firm entry into the marketplace enhances welfare in two distinct ways: 1) by promoting innovation, productivity and economic growth and 2) by increasing competition, which lowers prices and expands output. It is also well documented that barriers to entry reduce the likelihood that new firms will enter various sectors. We argue that the burden imposed by tax codes and tax compliance constitutes a barrier to entry that has been neglected in the previous literature. We use data from the World Bank to measure the administrative burden that the complexity of tax policy imposes on new firm. Additionally, we use a measure of new firm formation—entry density. Our data cover 118 countries over a period of six years. We find that the entry rate is significantly reduced by the tax administrative burden and that this effect is unrelated to general taxes on corporate profits and is robust to the inclusion of several important control variables.
    Keywords: tax administrative burden; entry; entrepreneurship; new firm formation; regulations; tax policy
    JEL: D22 H20 K20 L26 L51
    Date: 2013–05–27
  6. By: Bennmarker, Helge (IFAU - Institute for Evaluation of Labour Market and Education Policy); Calmfors, Lars (Institute for International Economics Study, Stockholm University); Larsson Seim, Anna (Department of Economics, Stockholm University)
    Abstract: Although there is a large literature on employment effects of earned income tax credits (EITCs) and unemployment benefits, less is known about wage effects. In our model the impact is via the net (after-tax) replacement rate. Using a panel of individuals from Sweden, we find a positive relationship between the net replacement rate and wages with semi-elasticities in the range 0.2-0.4. This implies that a one percent reduction in the unemployment benefit level or a one percent increase in the net-of-tax rate is associated with a fall in the before-tax wage of 0.1-0.2 per cent. EITCs and unemployment benefit reductions are thus likely to induce wage moderation.
    Keywords: Earned income tax credit; unemployment benefits; wage formation
    JEL: H24 J31 J38
    Date: 2013–05–10
  7. By: Frank Jotzo
    Abstract: China is considering a national emissions trading scheme, to follow several pilot schemes, as part of the suite of policies to reduce the growth of greenhouse gas emissions. A carbon tax or tax-like scheme could be an alternative. However there are special challenges in a fast-growing economy where the energy sector is heavily regulated. This paper analyses policy design options based on principles, China’s circumstances, and Australian and European experiences. The main findings are the following. (1) Features such as variable permit supple, price floor/ceiling or a fixed permit price are desirable to provide a stable price signal, especially in China’s case. A carbon tax can be a viable alternative or complement to emissions trading. (2) Any free permits or other assistance to industry should be carefully designed to preserve incentives to cut emissions, limited so that governments can use carbon revenue to support households or pay for other policy measures, and regularly reviewed to avoid lock-in of unnecessary payments. (3) Broad coverage of emissions pricing is necessary for effectiveness, including in electricity supply and demand. Carbon pricing can be partly effective in the electricity sector ahead of comprehensive energy sector reform, ultimately however market-based energy pricing is needed. (4) Carbon pricing should be seen in the broader context of economic policy reform. It offers opportunities to support broader goals of fiscal, energy and environmental policy.
    Keywords: Instrument China, emissions trading, carbon tax
    JEL: Q48 Q52 Q54 Q56 Q58 O12
    Date: 2013–05
  8. By: Hans Peter Grüner
    Abstract: Europe is going through an unprecedented period of fiscal consolidation and structural economic policy reforms. However, reforms undertaken in times of financial market stress may not be politically viable in the long run if they lack the necessary social balance. This paper studies the distributional consequences of European fiscal consolidation and structural reforms and the scope for further reforms. Suggestions for the efficient bundling of reforms are made. The paper also makes suggestions regarding the strategy of international advice to countries which need structural reforms and it discusses the design of international incentives and a possible role for international mediation.
    JEL: D70 H30 P11
    Date: 2013–04
  9. By: Philippe Aghion (Department of Economics, Harvard University and NBER); Ufuk Akcigit (Department of Economics Univerity of Pennsylvania and NBER); Jesus Fernandez-Villaverde (Department of Economics, University of Pennsylvania and NBER)
    Abstract: Chamley (1986) and Judd (1985) showed that, in a standard neoclassical growth model with capital accumulation and infinitely lived agents, either taxing or subsidizing capital cannot be optimal in the steady state. In this paper, we introduce innovation-led growth into the Chamley-Judd framework, using a Schumpeterian growth model where productivity-enhancing innovations result from pro.t-motivated R&D investment. Our main result is that, for a given required trend of public expenditure, a zero tax/subsidy on capital becomes suboptimal. In particular, the higher the level of public expenditure and the income elasticity of labor supply, the less should capital income be subsidized and the more it should be taxed. Not taxing capital implies that labor must be taxed at a higher rate. This in turn has a detrimental effect on labor supply and therefore on the market size for innovation. At the same time, for a given labor supply, taxing capital also reduces innovation incentives, so that for low levels of public expenditure and/or labor supply elasticity it becomes optimal to subsidize capital income.
    Keywords: : Capital tax, labor tax, optimal taxation, innovation, R&D, growth.
    JEL: H2 O3 O4
    Date: 2013–05–23
  10. By: Oliver Denk; Robert Hagemann; Patrick Lenain; Valentin Somma
    Abstract: Income inequality and relative poverty in the United States are among the highest in the OECD and have substantially increased over the past decades. These developments have been associated with a number of other worrying statistics, including low intergenerational social mobility and weak real income growth for many households. A more inclusive pattern of growth would require less pronounced gaps in outcomes and opportunities across social groups and a broader sharing of the benefits of growth. The present paper analyses the causes of US income inequality and relative poverty in an OECD context, especially the role of the tax-and-transfer system, and suggests public policies to promote inclusive growth. To a significant degree, high income inequality is attributable to the large dispersion of earned income, which should be addressed by reforming education, so as to provide disadvantaged students with the skills needed to fully realise their potential. In addition, taxes and transfers contribute less to income redistribution than in other OECD countries. If well designed, reforms that promote inclusive growth could also help reduce the market distortions resulting from the current tax-and-transfer system. In particular, phasing out personal and corporate tax expenditures that disproportionately benefit high earners would lower income inequality and improve resource allocation. As well, social transfers could be more effective in alleviating poverty through better targeting of the truly needy while reducing administrative complexity.<P>Inégalités et pauvreté aux États-Unis : Des politiques publiques en faveur d'une croissance inclusive<BR>Les inégalités de revenus et la pauvreté relative aux États-Unis sont parmi les plus élevées de l’OCDE et se sont considérablement accentuées au cours des dernières décennies. Ces phénomènes se doublent d’un certain nombre d’autres données préoccupantes, notamment la faiblesse de la mobilité sociale intergénérationnelle et l’évolution du revenu réel de nombreux ménages. Une structure de croissance plus inclusive impliquerait de combler les écarts dans la situation et les opportunités offertes aux différents groupes sociaux et un plus large partage des bénéfices de la croissance. La présente étude passe en revue les causes des inégalités de revenus et de la pauvreté relative aux États- Unis par rapport aux pays de l’OCDE, notamment le rôle du système de prélèvements et de prestations, et propose des mesures pour promouvoir une croissance mieux partagée. L’ampleur des inégalités de revenus s’explique dans une large mesure par la forte dispersion des revenus du travail, à laquelle il faudrait s’attaquer en réformant l’éducation pour que les étudiants issus de milieux défavorisés puissent acquérir les compétences dont ils ont besoin pour réaliser pleinement leur potentiel. En outre, le système de prélèvements et de prestations contribue moins à la redistribution du revenu que dans d’autres pays de l’OCDE. À condition d’être bien étudiées, des réformes favorisant une croissance inclusive pourraient également aider à réduire les distorsions de marché induites par le système actuel de prélèvements et de prestations. En particulier, la suppression progressive des dépenses fiscales en faveur des particuliers et des entreprises, qui favorisent les hauts revenus de manière disproportionnée, aurait pour effet d’atténuer les inégalités de revenus et d’améliorer l’allocation des ressources. De même, les transferts sociaux pourraient être employés plus efficacement à faire reculer la pauvreté si l’on ciblait mieux les bénéficiaires réellement nécessiteux tout en réduisant la complexité administrative des programmes.
    Keywords: tax system, United States, capital taxation, poverty, income inequality, tax expenditures, social welfare system, inclusive growth, education systems, income redistribution, transfer system, social insurance, means-tested transfers, États-Unis, dépense fiscale, pauvreté, système éducatif, inégalité des revenus, imposition du capital, système fiscal, croissance inclusive, redistribution du revenu, bien-être social, système de transferts, assurance sociale, transferts sous condition de ressource
    JEL: D31 D63 H2 H5 H7 I3
    Date: 2013–05–27
  11. By: Ben Westmore
    Abstract: This paper uses panel regression techniques to assess the policy determinants of private sector innovative activity – proxied by R&D expenditure and the number of new patents – across 19 OECD countries. The relationship between innovation indicators and multifactor productivity (MFP) growth is also examined with a particular focus on the role of public policies in influencing the returns to new knowledge. The results establish an empirical link between R&D and patenting, as well as between these measures of innovation intensity and MFP growth. Innovation-specific policies such as R&D tax incentives, direct government support and patent rights are found to be successful in encouraging the innovative activities associated with higher productivity growth. However, direct empirical evidence of the positive effects of these policies on productivity is less forthcoming. A pervasive theme from the analysis is the importance of coupling policies aimed at encouraging innovation or technological adoption with well designed framework policies that allow knowledge spillovers to proliferate. In particular, the settings of framework policies relating to product market regulation, openness to trade and debtor protection in bankruptcy provisions are found to be important for the diffusion of new technologies.<P>R&D, brevets et croissance : le rôle des politiques publiques<BR>Ce document utilise des techniques de régression en panel pour évaluer les déterminants politiques de l'activité d'innovation du secteur privé – représentée par les dépenses de R & D et le nombre de brevet - à travers 19 pays de l'OCDE. La relation entre les indicateurs de l'innovation et la croissance de la productivité multifactorielle (PMF) est également analysée avec une attention particulière sur le rôle des politiques publiques pour influencer les rendements de nouvelles connaissances. Les résultats établissent un lien empirique entre la R & D et les brevets, ainsi qu'entre ces mesures de l'intensité de l'innovation et la croissance de la PMF. Des politiques spécifiques d'innovation telles que des incitations fiscales pour la R & D, le soutien direct de l'État et les droits de brevet sont avérées efficaces pour encourager les activités innovantes associées à une plus forte croissance de la productivité. Toutefois, les preuves empiriques directes des effets positifs de ces politiques sur la productivité sont plus rares. Un thème récurrent de l'analyse est l'importance du couplage des politiques visant à encourager l'innovation ou l'adoption technologique avec des politiques-cadres bien conçues qui permettent une plus large diffusion des connaissances. En particulier, les paramètres des politiques-cadres relatives à la réglementation des marchés de produits, l'ouverture au commerce et à la protection du débiteur dans les dispositions de la faillite sont jugés importants pour la diffusion des nouvelles technologies.
    Keywords: productivity growth, innovation, public policy, intangible assets, politiques publiques, croissance de la productivité multifactorielle (PMF), innovations, immobilisations incorporelles
    JEL: L20 O30 O40
    Date: 2013–05–22
  12. By: TAKIZAWA Miho
    Abstract: Corporate-owned assets can be broadly divided into tangible (buildings, structures, etc.) and intangible (knowledge, technology, human resource, etc.). In recent years, efforts have been widely made to construct a quantitative assessment (visualization) of the latter. According to Hulten and Hao (2008), this paper tries to measure two intangible assets—research and development (R&D) stock and organization capital—and investigates their effect on firms' value. Accordingly, it turns out that firms' accumulation of intangible assets positively influences their value in Japan. Moreover, this paper estimates the investment function which makes Tobin's q an explanatory variable including intangible assets. As a result, the coefficient of Tobin's q is positive and significant. This implies that taking into account of intangible assets is important in modeling capital investment action.
    Date: 2013–05
  13. By: Vassili Joannides (GDF - Gestion, Droit et Finance - Grenoble École de Management (GEM)); Nicolas Berland (DRM - Dauphine Recherches en Management - CNRS : UMR7088 - Université Paris IX - Paris Dauphine)
    Abstract: Purpose - This paper contributes to the sociology-of-science type of accounting literature, addressing how accounting knowledge is established, advanced and extended. Design/methodology/approach - The research question is answered through the example of research into linkages between accounting and religion. Adopting an Actor-Network Theory (ANT) approach, we follow the actors involved in the construction of accounting as an academic discipline through the controversies in which they engage to develop knowledge. Findings - We show that accounting knowledge is established, advanced and developed through the ongoing mobilisation of nonhumans (journals) who can enrol other humans and nonhumans. We show that knowledge advancement, establishment and development is more contingent on network breadth than on research paradigms, which appear as side-effects of positioning vis-à- vis a community. Research limitations - In our analysis, we followed humans and were able to let them share their strategies with us and validate our ex post facto reading of their papers. We were unable to do the same with nonhumans because of their intrinsic properties. Practical implications - This paper provides scholars with analytical tools that could help them position their research projects within a scientific network and understand the need for interactions with other actors in establishing, advancing and developing knowledge. Originality value - The originality of this paper is twofold. Firstly, we apply ANT to accounting knowledge, whereas the accounting literature applies it to the spread of management accounting ideas, methods and practices. Secondly, we develop an original methodology for data collection by inviting authors from the network to give a reflexive account of their writings at the time they joined the network. Well diffused in sociology and philosophy, such an approach is, albeit, original in accounting research.
    Keywords: Research network; Accounting research; Knowledge; Actor-network theory; Controversies; Translation; Knowledge management
    Date: 2013–05–15

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