nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2014‒07‒21
three papers chosen by
Alexander Harin
Modern University for the Humanities

  1. Pertinence des mesures non-GAAP pour les marchés boursiers : le cas des firmes du CAC 40 By Denis Cormier; Samira Demaria
  2. Who participates in corporate income tax consolidation? Evidence from Japan By Kazuki Onji
  3. The influence of decentralized taxes and intergovernmental grants on local spending volatility. By Agnese Sacchi; Simone Salotti

  1. By: Denis Cormier (ESG UQAM, Montreal, Canada); Samira Demaria (University of Nice Sophia Antipolis, France; GREDEG CNRS)
    Abstract: This study focuses on the use of non-GAAP by French companies (CAC 40) and its impact on the stock market controlling for corporate governance. Our main results are as follows. First, we find a complementary effect between residual earnings and non- GAAP for market valuation. Second, in the presence of good governance, the impact of the publication of non-GAAP (number) on the valuation of residual results decreases. This could mean an abundance of non-GAAP reduces its relevance. Corporate governance would substitute to non-GAAP measures (number) for residual earnings valuation. Third governance itself has a positive impact on residual earnings valuation. However, unlike the number of non-GAAP published, the level of detail (number of pages) is not affected by corporate governance in residual earnings valuation. This could be explained by the fact that the AMF advocates for a reconciliation of non-GAAP and IFRS financial data. Fourth, our results suggest that after a certain threshold, non-GAAP (number or pages) create asymmetry in equity markets.
    Keywords: Corporate governance, Non-GAAP, Residual earnings, Stock market valuation
    JEL: M41 G14
    Date: 2014–07
  2. By: Kazuki Onji
    Abstract: When a group of affiliated corporations have the option to file a single tax return based on a combined income, what types of groups would take up the option? This study empirically analyses decisions to participate in a single-jurisdiction consolidated tax filing. The data consists of 2,782 Japanese corporate groups headed by publicly-traded corporations observed over 2002-2007. Results indicate higher likelihood of participation among groups characterised by low correlation in returns among group members, high variance in returns, large number of subsidiaries, and losses accumulated in parents. The significant influence of variance and covariance of returns suggests that a consolidation scheme improves the efficiency of corporate income tax through reducing profit shifting.
    JEL: G34 H25 K34
    Date: 2013
  3. By: Agnese Sacchi; Simone Salotti
    Abstract: We study what affects the volatility of sub-central spending in 20 OECD countries. The evidence based on data from 1972 to 2007 shows that the volatility of intergovernmental grants from upper levels is positively associated with the volatility of local expenditure. On the contrary, the volatility of local tax revenues - mainly that of property taxes - exerts the opposite effect. Thus, making local governments rely more on grants than own taxes seems to adversely affect the stability of their spending, while allowing them to autonomously levy taxes on responsive tax bases provides incentives to smooth their expenditure.
    Keywords: local spending volatility, local revenues, property taxes, intergovernmental grants.
    JEL: E62 H71 H77 R50
    Date: 2014–07

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