nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2014‒02‒21
six papers chosen by
Alexander Harin
Modern University for the Humanities

  1. Audit Fees in Family Firms Evidence From U.S. Listed Companies By Chiraz Ben Ali; Cédric Lesage
  2. A 150-year Perspective on Swedish Capital Income Taxation By Du Rietz, Gunnar; Johansson, Dan; Stenkula, Mikael
  3. Revenue Forecast Errors in the European Union By António Afonso; Rui Carvalho
  4. Progressivity of Taxes and Transfers: the Mexican Case 2012 By Luis Huesca; Abdelkrim Araar
  5. Structural Disposal and Cyclical Adjustment: Non-performing Loan, Structural Transition, and Regulatory Reform in Japan, 1998-2013 By KAWASHIMA, Toshiki; NAKABAYASHI, Masaki
  6. Fiscal Reform and Fiscal Sustainability: Evidence from Australia and Sweden By Tomomi Miyazaki

  1. By: Chiraz Ben Ali; Cédric Lesage
    Abstract: Family businesses are an important part of the world economy (Anderson and Reeb, 2003) and show significant differences in their corporate governance compared to non-family firms. Although displaying evident unique features, family firms have received relatively little attention as distinct from their equivalents in publicly held firms. Our study contributes to this growing research and investigates empirically the relationship between family shareholding and audit pricing. Using a sample of 3291 firm-year observations of major U.S. listed companies, for the period 2006- 2008, our results demonstrate that audit fees is negatively associated to family shareholding after taking into account unobservable firm effects, time-varying, industry effects and traditional control variables. The empirical results are robust to alternative family shareholding measures and estimation model specifications. Our results are consistent with the convergence-of-interests hypothesis suggesting that family firms face lower manager/shareholders agency costs. Auditors charge lower fees for family firms because of lower information asymmetry and risk as the controlling family is well informed about the firm and is better able to monitor managerial decisions.
    Keywords: Family firms, Audit Fees, Agency Conflicts, Corporate Governance
    Date: 2014–01–06
  2. By: Du Rietz, Gunnar (Research Institute of Industrial Economics (IFN)); Johansson, Dan (Örebro University School of Business); Stenkula, Mikael (Research Institute of Industrial Economics (IFN))
    Abstract: This paper describes the evolution of capital income taxation, including corporate, dividend, interest, capital gains and wealth taxation, in Sweden between 1862 and 2010. To illustrate the evolution, we present annual time-series data on the marginal effective tax rates on capital income (METR) for a marginal investment financed with new share issues, retained earnings or debt. Tax tables covering the period are presented. These data are unique in their consistency, thoroughness and time span covered. The METR is low, is stable and does not exceed five percent until World War I, when it starts to drift somewhat upward and vary depending on the source of finance. The outbreak of World War II starts a period when the magnitude and variation of the METR sharply increases. The METR peaks during the 1970s and 1980s and often exceeds 100 percent. The 1990–1991 tax reform and lower inflation reduce the magnitude and variation of the METR. The METR varies between 15 and 40 percent at the end of the examined period.
    Keywords: Cost of capital; Marginal effective tax rates; Marginal tax wedges; Tax reforms
    JEL: H21 H31 N44
    Date: 2014–02–07
  3. By: António Afonso; Rui Carvalho
    Abstract: In this paper we assess the determinants of revenue forecast errors for the EU-15 between 1999 and 2012, based on the forecasts published bi-annually by the European Commission. Our results show that personal income rate changes increase the revenue forecast errors: for forecasts made in t for t, increases in the corporate tax rate implies a decrease in the revenue forecast errors, in t+1 and t+2. Moreover, an increase in GDP forecast errors decreases revenue errors, whereas an increase in the inflation error will increase revenue errors. GDP errors, minority governments, election year and corporate tax rate changes can be associated with optimistic revenue forecasts. On the other hand, yield, inflation errors and VAT tax rate changes are associated with more prudent forecast behaviour.
    Keywords: macro forecasts, revenue forecast errors, EU
    JEL: C23 H20 H68
    Date: 2014–01
  4. By: Luis Huesca; Abdelkrim Araar
    Abstract: The paper examines the redistributive effect achieved by the tax-benefit system in Mexico in 2012 using personal income tax, indirect taxes, social security contributions and social benefits. Our goal is to analyze progressivity of the fiscal system and go further to demonstrate how the different taxes and benefits contribute to the total redistribution effect. A set of popular tools of studying progressivity, such as the concentration curves and Kakwani progressivity index, are used. In addition, we propose an analytical method to decompose the total progressivity measured by the contributions of different taxes or benefits. We conclude that Mexican tax-benefit system is progressive, with greater pre-fiscal income inequality and high redistributive effect for some specific figures of transfers. The contribution from Vertical Equity (VE) is relatively important, but Horizontal Inequity (HI) lightens its impact. Income taxation does not contribute largely to VE. Further, some program benefits target unequally the deprived population, and then decreases the positive effect induced by VE.
    Keywords: Progressivity, Redistribution, Taxes, Benefits, Targeting
    JEL: C14 D31 D33 H23 H24
    Date: 2014
  5. By: KAWASHIMA, Toshiki; NAKABAYASHI, Masaki (Institute of Social Science, The University of Tokyo)
    Abstract: Japan experienced falling asset prices, a financial market reform, and non-performing loan reduction from the late 1990s. This paper examines whether it was efficient to guide the banking sector to aggressively write off non-performing loans in the early 2000s under the shadow of regulatory reform and structural transition of corporate financing. Our results indicate that non-performing loans could have been cyclically reduced only by further extension of mortgage loan, as the deregulated corporate sector cut reliance on the banking and increased bond issuance. If another bubble of housing market to be avoided, the structural disposal is justified.
    Keywords: Non-performing loan reduction; structural transition; regulatory reform;mortgage loan; Japan
    JEL: G18 G28 K23
    Date: 2014–02–11
  6. By: Tomomi Miyazaki (Graduate School of Economics, Kobe University)
    Abstract: This paper examines how the adoption of a fiscal rule affects the sustainability of fiscal policy in two OECD countries; Australia and Sweden. While recent fiscal reforms undertaken in both these countries are useful for ensuring the sustainability of government budgets, there are a few differences. In Australia, we show that government revenues are not necessarily growing at a faster rate than government expenditures, at least from the viewpoint of a statistical long-run relationship. In contrast, in Sweden, we show the reform is more beneficial for the attainment of a budget surplus.
    Keywords: Fiscal reform; Sustainability of fiscal policy; Expenditure ceilings; Dynamic OLS
    JEL: E62 H61 H62
    Date: 2014–02

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