nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2013‒10‒25
eight papers chosen by
Alexander Harin
Modern University for the Humanities

  1. The IASB Conceptual Framework: Purpose and Status By Chiara Saccon
  2. Tax Me If You Can! Optimal Nonlinear Income Tax between Competing Governments By Lehmann, Etienne; Simula, Laurent; Trannoy, Alain
  3. Taxes and the Choice of Organizational Form by Entrepreneurs in Sweden By Edmark, Karin; Gordon, Roger
  4. Heavy subsidization reduces free-ridership : Evidence from an econometric study of the French dwelling insulation tax credit By Marie-Laure Nauleau
  5. Indirect Tax Reform and Fiscal Federalism in India By Raghbendra Jha
  6. Materiality from financial towards non-financial reporting By Chiara Mio
  7. Structural Adjustment and Unit Labour Cost Developments in Europe’s Periphery: Patterns before and during the Crisis By Doris Hanzl-Weiss; Michael Landesmann
  8. WTO Trade Effects and Identification Problems: Why Knowing The Structural Properties of WTO Memberships Matters? By Juyoung Cheong; Do Won Kwak; Kam Ki Tang

  1. By: Chiara Saccon (Dept. of Management, Università Ca' Foscari Venice)
    Abstract: The paper focuses on the difference between the importance given to a conceptual framework for financial accounting and the authority recognized in it in reality. Attention will be given to the status of the conceptual framework, derived from the purpose assigned to it, in an accounting system based on standard settings, the ÒnaturalÓ environment for a conceptual framework, and in a system based on legislative regulation where the framework could represent a redundancy. To this aim the paper analyses the content of the 1989 IASC Framework, the revised version coming from the IASBFASB joint project, in 2010, and the premise of the announced Discussion Paper, expected July 2013, as a result of the only-comprehensive IASB project. Final results of the analysis show a substantial status quo notwithstanding the evolution of the IAS/IFRS Conceptual Framework regarding the authority given to it. On the European regulatory side this changing situation contributes to inconsistencies requiring new intervention into the endorsement process by means of adjustments in stated evaluation criteria. The perspectives offered by the new context in which the IASB Conceptual Framework is being revised could represent a valuable opportunity to make the conceptual framework authority undoubted.
    Keywords: Conceptual Framework, IASB, status
    JEL: M41 M48
    Date: 2013–10
  2. By: Lehmann, Etienne (CRED, Université Panthéon Assas Paris 2); Simula, Laurent (Uppsala University); Trannoy, Alain (EHESS, Paris)
    Abstract: We investigate how potential tax-driven migrations modify the Mirrlees income tax schedule when two countries play Nash. The social objective is the maximin and preferences are quasilinear in income. Individuals differ both in skills and migration costs, which are continuously distributed. We derive the optimal marginal income tax rates at the equilibrium, extending the Diamond-Saez formula. The theory and numerical simulations on the US case show that the level and the slope of the semi-elasticity of migration on which we lack empirical evidence are crucial to derive the shape of optimal marginal income tax. Our simulations show that potential migrations result in a welfare drop between 0.4% and 5.3% for the worst-off and an average gain between 18.9% and 29.3% for the top 1%.
    Keywords: optimal income tax, income tax competition, migration, labor mobility, Nash-equilibrium tax schedules
    JEL: D82 H21 H87
    Date: 2013–09
  3. By: Edmark, Karin (Research Institute of Industrial Economics (IFN)); Gordon, Roger (University of California)
    Abstract: This paper estimates the role of both tax and non-tax determinants in the choice in Sweden to be a closely-held corporation vs. a proprietorship, using individual data for 2004 to 2008 on owners of closely-held businesses. While lower-income individuals face relatively neutral incentives, higher income individuals face strong tax incentives to be corporate. The data suggest a relatively strong correlation between these tax incentives and the likelihood that a firm is corporate. Many conventional non-tax determinants are confirmed in the data as well.
    Keywords: Self-employment; Entrepreneurship; Taxation of closely-held businesses; Business organizational form
    JEL: G32 G38 H25
    Date: 2013–10–10
  4. By: Marie-Laure Nauleau (CIRED - Centre International de Recherche sur l'Environnement et le Développement - Centre de coopération internationale en recherche agronomique pour le développement [CIRAD] : UMR56 - CNRS : UMR8568 - École des Hautes Études en Sciences Sociales [EHESS] - École des Ponts ParisTech (ENPC) - AgroParisTech)
    Abstract: This econometric study assesses the efficiency of the tax credit implemented in France in 2005 on dwelling retrofitting investments. A before-after estimation is performed at the extensive and intensive margins on micro data over 2001-2011, focusing on insulation measures (windows, walls, roofs, floor, ceilings). After 2-years of latency with no significant effect, the tax credit has had an increasing significant positive effect at both margins between 2007 and 2010, with a decrease in 2011, in line with the tax credit rate evolutions. Focusing on opaque surfaces insulation, the positive effect only started in 2009, when a reform included labor cost in the tax credit base for these retrofitting measures. The percentage of subsidized households that would have invested even in the absence of the subsidy decreases from 79% in 2007 to 43% in 2010. The annual additional private investment in retrofitting generated by 1€ of public expenses was estimated at 3.4€ on average (standard deviation : 2.4) between 2007 and 2010.
    Keywords: Energy conservation; residential sector; thermal insulation; tax credit; free-ridership; before/after estimation; France
    Date: 2013–07
  5. By: Raghbendra Jha
    Abstract: This paper underscores the substantial spatial disparities across India and evaluates the case for putting together (various versions) of the Goods and Service Tax (GST) and also indicates the risks involved in the process. This paper argues that, on balance, there is a case for an appropriately constituted GST but that the federal transfer formula must be sensitive to any fallout from such a move. The paper also argues that there is an urgent need to review the totality of transfers from the central to state governments and local bodies. This review would include transfers through Finance Commission, Planning Commission and Centrally Sponsored Schemes. There is a compelling necessity to review and recalibrate the entire gamut (and not piecemeal) of federal relations – tax, expenditure and transfers. This is critical to ensure the stability and predictability needed to ensure that India’s state driven growth blossoms and attains full fruition.
    Keywords: Fiscal Federalism, GST, federal transfers, India
    JEL: H2 H5 H6 H7 O5
    Date: 2013
  6. By: Chiara Mio (Dept. of Management, Università Ca' Foscari Venice Author-Name: Marco Fasan; Dept. of Management, Università Ca' Foscari Venice)
    Abstract: The article aims at discussing the evolution of the concept of materiality in financial and, more specifically, non-financial reporting. Materiality will play a central role in the next years in order for reports to reach conciseness, which is at present one of the main goals both financial and non-financial reporting (in particular Integrated Reporting) aims to achieve. The article reviews the most relevant materiality frameworks and definitions and provides further insights for the advancement of the debate on materiality. It also analyzes the main differences (in terms of financial performance and governance characteristics) of the companies joining the IIRC Pilot Program that tackled the issue of materiality more effectively.
    Keywords: materiality, non-financial information, integrated report
    JEL: M41
    Date: 2013–10
  7. By: Doris Hanzl-Weiss (The Vienna Institute for International Economic Studies, wiiw); Michael Landesmann (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: Abstract This paper analyses developments in production structures in pre-crisis and during the crisis years in the range of EU ‘peripheral economies’ (i.e. the lower- and medium-income economies in the South and the Centre/East). The emphasis is on the development of the tradable sector (and manufacturing in particular) relative to non-tradable sectors and whether these are reflected in longer-term trade imbalances. Different groups of economies emerge, some with a strong manufacturing base, others with a very weak one. We investigate whether and to which extent structural readjustments took place during the crisis years and also analyse in detail relative unit labour cost (ULC) developments across sectors. A decomposition analysis shows that ULC developments are mainly driven during the crisis by output and employment adjustments (rather than by labour compensation) posing the question of whether capacity contraction effects might make ‘weak economies’ in the EU’s periphery even more ‘trade balance constrained’ in the wake of the crisis.
    Keywords: tradable sector, non-tradable sector, real effective exchange rates, unit labour costs, Europe’s peripheral economies, trade and current account imbalances, structural developments in Europe’s periphery, Central and Southeast Europe
    JEL: J3
    Date: 2013–09
  8. By: Juyoung Cheong (School of Economics, The University of Queensland); Do Won Kwak (School of Economics, The University of Queensland); Kam Ki Tang (School of Economics, The University of Queensland)
    Abstract: Since Rose’s (2004) striking finding of negligible WTO trade effects, numerous studies have at- tempted to solve the so-called WTO puzzle. These studies adopt novel model specifications to control for potential sources of bias, but often lead to conflicting results. Multilateral resistance terms (MRTs), unobserved country-pair heterogeneity (UCPH) and heteroskedastic errors in log- linear model are considered the most crucial controls. What has gone unnoticed, however, is that the first two controls lead to identification problems in the estimation of WTO trade effects. We show that controlling for MRTs leads to near-prefect multicollinearity because of a structural rela- tionship between the variables that measure the GATT/WTO membership statuses of any country- pairs. Also because of this structural relationship, accounting for UCPH using country-pair fixed effects (CPFEs) could reduce the number of observations that contribute to the identification of WTO trade effects by more than 98%. These identification problems make the estimates of WTO trade effects very imprecise and sensitive to model specifications, partly explaining the diverse re- sults in the literature. We propose a two-stage method that avoids these identification problems.
    Date: 2013–10–16

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