nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2014‒03‒22
eight papers chosen by
Alexander Harin
Modern University for the Humanities

  1. Tax Principles and Tariff-Tax Reforms under International Oligopoly By Kenji Fujiwara
  2. India’s Move from Sales Tax to VAT: A Hit or Miss? By Santra, Sattwik; Hati, Koushik Kumar
  3. Investment stimuli under government present-biased time preferences By Di Corato, Luca
  4. Offshore financial centers and bank secrecy By Patrice Pieretti; Jacques-François Thisse; Skerdilajda Zanaj
  5. International Capital Flows and Yields of Public Debt Bonds By Márcia Saraiva Leon
  6. Direct and indirect effects of R&D cooperation on the innovation of Italian firms By Otello Ardovino; Luca Pennacchio; Giuseppe Piroli
  7. Production theory: accounting for firm heterogeneity and technical change By G. Dosi; M. Grazzi; L. Marengo; S. Settepanella
  8. Patents as quality signals? The implications for financing constraints on R&D By Czarnitzki, Dirk; Hall, Bronwyn H.; Hottenrott, Hanna

  1. By: Kenji Fujiwara (School of Economics, Kwansei Gakuin University)
    Abstract: This paper, in a two-country duopoly model, compares destination- and origin-based commodity taxes in a context of a unilateral tariff-tax reform that fixes the world price and foreign welfare. We find that the proposed reform reduces domestic welfare, and hence is strictly Pareto-deteriorating under the destination principle while the opposite holds under the origin principle. Moreover, it is shown that this ranking is reversed if exports are taxed. In short, which is preferable between destination and origin taxation depends on the tax principle and which between imports and exports are taxed.
    Keywords: tax principles, tariff-tax reform, destination-based consumption tax, origin-based production tax
    JEL: F12 F13 H2
    Date: 2014–03
  2. By: Santra, Sattwik; Hati, Koushik Kumar
    Abstract: Government of India introduced Value Added Tax (VAT) across all its states in subsequent stages in the early years of this millennium. The main motive behind this move was to make the commercial tax collection more transparent, accountable and revenue enhancing. The purpose of this paper is to analyze if the introduction of VAT has indeed served its purpose or not. We find that in terms of the effective change in the rate of taxation and in terms of a change in the overall tax base, the number of states affected adversely by the new VAT regime is greater than the number of states that have been affected positively. Also the sum of the average tax collected, as well as the sum of the average state domestic product of the negatively affected states far outweighs those of the states affected favorably.
    Keywords: Sales Tax, Value Added Tax, Revenue, India
    JEL: C23 C51 H20 H21 H71
    Date: 2014–01–01
  3. By: Di Corato, Luca (Department of Economics, Swedish University of Agricultural Sciences)
    Abstract: This paper examines the net benefit accruing to a present-biased government contemplating the option of speeding up investment using a tax cut or an investment subsidy as an incentive. The literature generally suggests the use of an investment subsidy rather than a tax cut. However, this study shows that, depending on the degree of present-biasedness, it may be more advantageous for the government to provide a tax cut.
    Keywords: Investment; Tax reduction; Investment subsidy; Quasi-hyperbolic discounting; Real options;
    JEL: C61 H20
    Date: 2014–03–13
  4. By: Patrice Pieretti (CREA, Université de Luxembourg); Jacques-François Thisse (Université catholique de Louvain); Skerdilajda Zanaj (CREA, Université de Luxembourg)
    Abstract: We study the impact of an offshore financial center on the economy in the presence or absence of bank secrecy in a two-country setting with heterogeneous investors who choose where to deposit their savings. Rather than focussing on tax competition, we acknowledge that countries use two instruments to attract investors: tax rate and institu- tional infrastructure. Owing to its ability to quickly redesign its regulation environment, the small country has a comparative advantage in providing high-quality institutional in- frastructure. We show that the presence of an offshore financial center fosters competition in institutional infrastructure, which is beneficial with or without bank secrecy.
    Keywords: Offshore financial centers; portfolio investments; institutional infrastructure competition; tax competition.
    JEL: G20 H40 H54
    Date: 2014
  5. By: Márcia Saraiva Leon
    Abstract: The paper analyzes nominal yields of five-year fixed-rate Brazilian Domestic Federal Public Debt (DFPD) bonds in response to fluctuations in international net capital flows to Brazil for the period January 2007 to July 2012. The results show that estimation in differences with error correction obtains a long-run relationship between the yield, the foreign participation in the DFPD and the target Selic rate that reproduces previous results. When the ratio of net foreign long-term fixed-income investments relative to GDP is a substitute for foreign participation in the DFPD, the new explanatory variable is also significant in the long run, when the cointegrating equation includes the yield of five-year United States Treasury bonds. In turn, fiscal balance, investors’ risk aversion, output gap, the tax rate on financial transactions made by nonresident investors and the effective rate of reserve requirements influence the yields in the short run
    Date: 2014–01
  6. By: Otello Ardovino; Luca Pennacchio; Giuseppe Piroli
    Abstract: Firm innovation capacity depends not only on internal capabilities, but also on external expertise and knowledge acquired through cooperation. This paper analyzes direct and indirect effect of R&D cooperation on the innovation of Italian firms. Using a multivariate probit model to account for the complementarity of four different types of innovation activity and the heterogeneity in the choice of cooperation partners, we find strong and positive direct effects of collaborations with some non-competitive partners (suppliers, clients, private research institutes and consultants). Also R&D cooperation with competitors shows a relevant direct effect on firm innovation. On the contrary, collaborations with university have weaker effects; this could perhaps be due to the short-term perspective adopted in the study. These findings suggest that it is important to look at the specific type of R&D collaborations because they have a different impact on the success of innovative activities. On the other hand, indirect effects are scant and restricted to cooperation with some non-competitive partners. Such a result suggests that absorptive capacity of firms and R&D spillovers are quite weak in Italian context. Lastly, firm size and sector-specific features also affect innovation propensity.
    Keywords: R&D collaboration, absorptive capacity, moderating variable, innovation, equation probit model, community innovation survey.
    JEL: L13 O30 O32
    Date: 2014–03–03
  7. By: G. Dosi; M. Grazzi; L. Marengo; S. Settepanella
    Abstract: The paper presents a new framework to assess firm level heterogeneity and to study the rate and direction of technical change. Building on the analysis of revealed short-run production functions by Hildenbrand (1981), we propose the (normalized) volume of the zonotope composed by vectors-firms in a narrowly defined industry as an indicator of inter-firm heterogeneity. Moreover, the angles that the main diagonal of the zonotope form with the axes provide a measure of the rates and directions of technical change over time. The proposed framework can easily account for n-inputs and m-outputs and, crucially, the measures of heterogeneity and technical change do not require many of the standard assumptions from production theory.
    JEL: D24 D61 C67 C81 O30
    Date: 2014–03
  8. By: Czarnitzki, Dirk; Hall, Bronwyn H.; Hottenrott, Hanna
    Abstract: Information about the success of a new technology is usually held asymmetrically between the research and development (R&D)-performing firm and potential lenders and investors. This raises the cost of capital for financing R&D externally, resulting in financing constraints on R&D especially for firms with limited internal resources. Previous literature provided evidence for start-up firms on the role of patents as signals to investors, in particular to Venture Capitalists. This study adds to previous insights by studying the effects of firms' patenting activity on the degree of financing constraints on R&D for a panel of established firms. The results show that patents do indeed attenuate financing constraints for small firms where information asymmetries may be particularly high and collateral value is low. Larger firms are not only less subject to financing constraints, but also do not seem to benefit from a patent quality signal. --
    Keywords: Patents,Quality Signal,Research and Development,Financial Constraints,Innovation Policy
    JEL: O31 O32 O38
    Date: 2014

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