nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2015‒03‒13
ten papers chosen by
Alexander Harin
Modern University for the Humanities

  1. Implementing Basel III through the Capital Requirements Directive (CRD) IV: leverage ratios and capital adequacy requirements By Ojo, Marianne
  2. Impact of capital gains taxation on the holding period of investments under different tax systems By Hegemann, Annika; Kunoth, Angela; Rupp, Kristina; Sureth, Caren
  3. 2013 EU Industrial R&D Investment Scoreboard By Hector Hernandez; Alexander Tuebke; Fernando Hervas; Antonio Vezzani; Sara Amoroso
  4. Does exchange of information between tax authorities influence multinationals' use of tax havens? By Braun, Julia; Weichenrieder, Alfons
  5. Taxes and Corporate Financing Decisions – Evidence from the Belgian ACE Reform By Nils aus dem Moore
  6. Do Wages Rise when Corporate Taxes Fall? - Evidence from Germany’s Tax Reform 2000 By Nils aus dem Moore; Tanja Kasten; Christoph M. Schmidt
  7. 2011 Social Accounting Matrix for Senegal: By Fofana, Ismaël; Diallo, Mamadou Yaya; Sarr, Ousseynou; Diouf, Abdou
  8. Shifting the Burden of Corporate Taxes: Heterogeneity in Direct Wage Incidence By Nils aus dem Moore
  9. Corporate Taxation and Investment: Evidence from the Belgian ACE Reform By Nils aus dem Moore
  10. Capital Tax Reform and the Real Economy: The Effects of the 2003 Dividend Tax Cut By Danny Yagan

  1. By: Ojo, Marianne
    Abstract: The Capital Requirements Directive (CRD) IV, which constitutes the Capital Requirements Regulation (CRR), as well as the Capital Requirements Directive (CRD), is aimed at implementing Basel III in the European Union. Consequently, this CRD package, replaces Directives 2006/48 and 2006/49 with a Regulation and a Directive. The significance of such a move not only highlights the awareness of the importance of ensuring that Basel rules and regulations become more binding and enforceable, but also signals an era whereby the use of enforcement and supervisory tools such as Binding Technical Standards (BTS) are being introduced and generated by the European Banking Authority, as its plays a crucial role in the implementation of Basel III in the EU. Another significance of such a move towards Basel rules and regulations becoming more enforceable and binding lies in the facilitation of greater consistency, convergence and compliance, which the introduction of a Regulation, Binding Technical Standards, as well as other reporting requirements and provisions would generate in the implementation process. The increased relevance of Basel rules, and particularly Basel III rules, as well as their significance for the Eurozone, European Union institutions and European banks is hereby emphasised. This paper is also aimed at providing an analysis of the recent updates which have taken place in respect of the Basel III Leverage Ratio and the Basel III Supplementary Leverage Ratio – both in respect of recent amendments introduced by the Basel Committee and proposals introduced in the United States. As well as highlighting and addressing gaps which exist in the literature relating to liquidity risks, corporate governance and information asymmetries, by way of reference to pre-dominant based dispersed ownership systems and structures, as well as concentrated ownership systems and structures, this paper will also consider the consequences – as well as the impact - which Basel III, and in particular, the recent Basel Leverage ratios could have on the Eurozone, and European financial institutions. From this perspective, the rise of macro economics, micro economic inefficiency debates - as well as the validity of such debates will be considered.
    Keywords: Basel III; Capital Requirements Directive IV; European Banking Authority; enforcement; supervision; Binding Technical Standards; Keynesian revolution; macroeconomics; micro economic inefficiency
    JEL: D8 E3 E6 G2 G3 K2 M4
    Date: 2015–03–06
  2. By: Hegemann, Annika; Kunoth, Angela; Rupp, Kristina; Sureth, Caren
    Abstract: An investment that is characterized by exit flexibility requires both decisions on investment and holding period. As selling an investment often leads to tax-liable capital gains and capital gains crucially depend on the duration of an investment we investigate the impact of capital gains taxation on the holding period under three different tax systems. In our analytical investigation we examine whether there is an optimal exit time and if there is no optimal exit time, what would be an appropriate time of sale. Moreover, we determine the worst exit time which should be avoided by investors. We find that while often an immediate sale is optimal longer holding periods may be beneficial under certain conditions. Beyond the well-known impact of the retention policy we clarify that the minimal holding period particularly depends on the degree of income and corporate tax integration. We find, e.g., a high retention rate to extend the minimum holding period under a shareholder relief tax system but is likely to accelerate sales under a classic corporate tax system. These results help to anticipate the economic implications of capital gains taxes on investment. Obviously, depending on the underlying tax system the after-tax profitability of long-term and sustainable investments is particularly affected by capital gains taxes. These results are interesting for both investors and tax politicians.
    Keywords: Capital Gains Taxation,Holding Period,Exit Flexibility,Investment Decisions,Timing Decisions
    JEL: H20 H21 H25
    Date: 2015
  3. By: Hector Hernandez (JRC-IPTS); Alexander Tuebke (JRC-IPTS); Fernando Hervas (JRC-IPTS); Antonio Vezzani (JRC-IPTS); Sara Amoroso (JRC-IPTS)
    Abstract: The 2013 "EU Industrial R&D Scoreboard" (the Scoreboard) contains economic and financial data of the world's top 2000 companies ranked by their investments in research and development (R&D). The sample contains 527 companies based in the EU and 1474 companies based elsewhere. The Scoreboard data are drawn from the latest available companies' accounts, i.e. the fiscal year 2012.
    Keywords: economy, investment, research and development
    Date: 2013–12
  4. By: Braun, Julia; Weichenrieder, Alfons
    Abstract: Since the mid-1990s, countries offering tax systems that facilitate international tax avoidance and evasion have been facing growing political pressure to comply with the internationally agreed standards of exchange of tax information. Using data of German investments in tax havens, we find evidence that the conclusion of a bilateral tax information exchange agreement (TIEA) is associated with fewer operations in tax havens and the number of German affiliates has on average decreased by 46% compared to a control group. This suggests that firms invest in tax havens not only for their low tax rates but also for the secrecy they offer.
    Keywords: tax havens,tax information exchange agreements,location decisions,international taxation
    JEL: F21 F23 H87
    Date: 2015
  5. By: Nils aus dem Moore
    Abstract: We contribute to the empirical literature on the debt bias of corporate income taxation through a micro-econometric evaluation of the so-called ACE corporate tax reform in Belgium based on firm-level accounting data. We interpret the tax reform that came into effect in January 2006 as an economic quasi experiment. We identify its causal impact on the leverage ratio of Belgian corporations by means of a difference-in-differences (DiD) approach, using corporations from the UK as comparison group. Our results document that the ACE reform led to a systematic pattern of heterogeneous effects on the capital structure of Belgian corporations, as the estimated reduction of the leverage ratio is most pronounced for big firms. Estimation of quantile treatment effects further reveals that reform effects get monotonically larger across the distribution of firm leverage. Finally, we provide evidence of sectoral heterogeneity with significant effects observed for capital-intensive but not for labor-intensive sectors.
    Keywords: Corporate income taxation; financial structure; debt bias; allowance for corporate equity; difference-in-differences
    JEL: H25 H32 H22 G32
    Date: 2014–12
  6. By: Nils aus dem Moore; Tanja Kasten; Christoph M. Schmidt
    Abstract: We contribute to the empirical literature on the effective incidence of corporate income taxation by using the German Business Tax Reform of the year 2000 (GBTR 2000) as a natural experiment. Its effect on wages in the manufacturing sector is identified by means of a difference-in-differences analysis that uses French fi rms as comparison group. We provide evidence that GBTR 2000 led to a significant and sizeable wage effect. For 2001, the first year after GBTR 2000 took eff ect, we estimate a short-run effect that implies a wage increase of 7.9 percent. Due to the dynamic nature of the empirical model used, the incidence effect grows gradually over time during the evaluation period.
    Keywords: Corporate income taxation; tax reform; tax incidence; profit taxation; wages; difference-in-differences
    JEL: H22 H25 J31 J38
    Date: 2014–12
  7. By: Fofana, Ismaël; Diallo, Mamadou Yaya; Sarr, Ousseynou; Diouf, Abdou
    Abstract: This document describes the construction of a social accounting matrix (SAM) for Senegal. The SAM is based upon 2011 national accounts statistics and provides a consistent framework for the assessment of growth and employment policies.
    Keywords: National accounting, Finance, Indicators, Macroeconomics, Social Accounting Matrix (SAM), Computable General Equilibrium (CGE) model,
  8. By: Nils aus dem Moore
    Abstract: We contribute to the empirical literature on the effective incidence of corporate income taxation. We focus on the so-called direct incidence via the wage bargaining process. Building on the innovative framework of Arulampalam, Devereux and Maffini (2012), we analyze the importance of various dimensions of heterogeneity at the firm-level. In particular, we investigate the distinct effects of (i) firm size, (ii) level of profitability, and (iii) competition intensity across (iv) different economic sectors. Furthermore, we investigate the relative importance of the surrounding institutional setting. To this end, a firm-level within-country approach is pursued separately for two different economies, namely France and the United Kingdom, which can be regarded as polar cases with respect to the relevant features of the wage-setting process. However, in many respects, we find surprisingly similar results for both countries. Thereby, this paper also adds to the literature by providing new insights on the degree to which results from previous single-country studies can possibly be generalized.
    Keywords: Corporate income iaxation; profit taxation; tax incidence; wages; difference-in-differences
    JEL: H22 H25 J31 J38
    Date: 2014–12
  9. By: Nils aus dem Moore
    Abstract: We contribute to the empirical literature on the relationship between corporate taxes and investment. We exploit the introduction of the so-called ACE corporate tax reform in Belgium that came into effect in January 2006 to evaluate this relationship in a quasiexperimental setting based on firm-level accounting data. To identify the causal effect of the reform on capital spending of Belgian corporations, we focus on the indirect effect of taxes on investment via their impact on free cash-flow. We use the systematic variation of the cash-flow sensitivity of investment between small and medium versus large firms to form treatment and control groups for difference-in-differences (DiD) estimations. Our benchmark results provide highly significant and robust estimates that correspond to an increase in investment activity by small and medium-sized firms of about 3 percent in response to the ACE reform. We substantiate the robustness of our results by means of triple differences estimations (DDD) that use a matched sample of French companies as an additional dimension of contrast.
    Keywords: Corporate income taxation; investment; capital budgeting; allowance for corporate equity; difference-in-differences
    JEL: H25 H32 H22 G31
    Date: 2014–12
  10. By: Danny Yagan
    Abstract: Policymakers frequently propose to use capital tax reform to stimulate investment and increase labor earnings. This paper tests for such real impacts of the 2003 dividend tax cut—one of the largest reforms ever to a U.S. capital tax rate—using a quasi-experimental design and a large sample of U.S. corporate tax returns from years 1996-2008. I estimate that the tax cut caused zero change in corporate investment, with an upper bound elasticity with respect to one minus the top statutory tax rate of .08 and an upper bound effect size of .03 standard deviations. This null result is robust across specifications, samples, and investment measures. I similarly find no impact on employee compensation. The lack of detectable real effects contrasts with an immediate impact on financial payouts to shareholders. Economically, the findings challenge leading estimates of the cost-of-capital elasticity of investment, or undermine models in which dividend tax reforms affect the cost of capital. Either way, it may be difficult for policymakers to implement an alternative dividend tax cut that has substantially larger near-term effects.
    JEL: G31 G35 G38 H25 H32
    Date: 2015–03

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