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on Accounting and Auditing |
| By: | De Simone, Lisa (Stanford University) |
| Abstract: | I test whether adoption of IFRS by individual affiliates of multinational entities (MNEs) for unconsolidated financial reporting facilitates tax-motivated income shifting. MNEs often justify transfer prices to tax authorities by benchmarking intercompany profit allocations against a range of book profit rates reported by economically comparable, independent firms that use similar accounting standards. Additional qualifying benchmark firms resulting from IFRS adoption could allow managers to support more tax-advantaged transfer prices. Using a database of European unconsolidated financial and ownership information over 2003 to 2012, I first document an increase in the arm's length range of book profits reported by potential IFRS benchmark firms following affiliate adoption of IFRS. I then estimate a statistically and economically significant 11.3 percent tax-motivated change in reported book pre-tax profits following affiliate IFRS adoption, relative to pre-adoption and non-adopter affiliate-years. |
| Date: | 2015–04 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:stabus:3267&r=acc |
| By: | aus dem Moore, Nils |
| 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. |
| Abstract: | Das Paper leistet einen Beitrag zur empirischen Literatur über den Zusammenhang von Unternehmensbesteuerung und Investitionstätigkeit. Konkret wird auf Basis von Bilanzdaten ermittelt, welchen Effekt die im Jahr 2006 vollzogene Einführung einer zinsbereinigten Gewinnsteuer in Belgien auf die Investitionsquote der betroffenen Unternehmen hatte. Systematische Unterschiede in der Cashflow-Abhängigkeit der Investitionen zwischen kleinen und mittleren Firmen einerseits und Großunternehmen andererseits bilden dabei die Grundlage für die Anwendung eines Differenz-von-Differenzen-Ansatzes. Die Schätzungen weisen auf eine hoch signifikante und robuste Steigerung der Investitionstätigkeit kleiner und mittlerer Unternehmen um etwa drei Prozent hin. Die Robustheit dieses Ergebnisses wird durch Schätzungen erhärtet, in denen eine Kontrollgruppe aus französischen Unternehmen als weitere Ebene im Differenz-von-Differenzen-Ansatz verwendet wurde. |
| Keywords: | corporate income taxation,investment,capital budgeting,allowance for corporate equity,difference-in-differences |
| JEL: | H25 H32 H22 G31 G38 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:rwirep:534&r=acc |
| By: | aus dem Moore, Nils |
| 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. |
| Abstract: | Klassische Systeme der Unternehmensbesteuerung verzerren die Finanzierungsentscheidung von Unternehmen ('Debt Bias'): Weil Zinsen für Fremdkapital von der Steuerbasis abgezogen werden können, die (Opportunitäts) Kosten für Eigenkapital jedoch nicht, gibt das Steuersystem den Unternehmen einen Anreiz für höhere Verschuldung. Diese Verzerrung kann mithilfe einer zinsbereinigten Gewinnsteuer überwunden werden, welche kalkulatorische Kosten für das Eigenkapital ebenfalls steuerabzugsfähig macht. Das Paper evaluiert die Einführung einer derartigen Reform in Belgien im Jahr 2006 auf der Basis von Bilanzdaten der betroffenen Firmen. Mithilfe eines Differenz-von-Differenzen-Ansatzes wird der Effekt der Reform auf den Verschuldungsgrad belgischer Unternehmen identifiziert, wobei Unternehmen aus Großbritannien die Vergleichsgruppe bilden. Es zeigt sich ein systematisches Muster heterogener Reformeffekte: Einerseits ist der Rückgang des Verschuldungsgrads für Großunternehmen am stärksten ausgeprägt. Quantilseffektschätzungen weisen zudem darauf hin, dass jene Unternehmen am stärksten auf die Reform reagieren, die zuvor einen überdurchschnittlich hohen Verschuldungsgrad aufgewiesen haben. Sektor-spezifische Schätzungen zeigen schließlich, dass signifikante Reformeffekte vor allem in kapital- aber nicht in arbeitsintensiven Wirtschaftszweigen auftreten. |
| Keywords: | corporate income taxation,financial structure,debt bias,allowance for corporate equity,difference-in-differences |
| JEL: | H25 H32 H22 G32 G38 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:rwirep:533&r=acc |
| By: | Bergheim, Ralf; Ernstberger, Jürgen; Roos, Michael W. M. |
| Abstract: | This paper experimentally investigates how fair value measurements of financial instruments affect the decision of nonprofessional investors to invest in a bank's shares. Specifically, we assess how investors respond to variations in net income resulting from fair value adjustments in trading assets and how the reliability of the fair value estimates affects their decision. We find that investment decreases as a result of transitions from the first to the third level and we even observe lower investments in case of positive changes in income. Investment decreases most if negative valuation adjustments are based on level 1 estimates suggesting that down pricing by the market is considered as a worse signal than model-based decreases in net income. For larger positive and negative adjustments the impact of valuation levels on investment turns out to be limited. Our results do not provide evidence that Fair Value Accounting per se induces pro-cyclical investment behavior. |
| Abstract: | Die experimentelle Studie untersucht, wie die Bewertung zum Fair Value die Investitionsentscheidung nicht-professioneller Investoren beeinflusst. Dabei wird die Entscheidung, in Aktien einer Bank zu investieren, in Reaktion auf verschieden hohe Bewertungsänderungen der Aktiva Position 'Wertpapiere' der Bank untersucht. Es erfolgt des Weiteren eine differenzierte Betrachtung der Auswirkungen der Fair Value Hierarchie (Level 1-3) auf die Investitionsbereitschaft. Die Resultate zeigen, dass die Investitionsbereitschaft sowohl für negative als auch positive Bewertungsänderungen abnimmt. Die geringste Investitionsbereitschaft wird im Fall von negativen Bewertungsänderungen auf Grundlage beobachtbarer Marktpreise beobachtet (Level 1). |
| Keywords: | banks,fair value accounting,nonprofessional investors,investment decision,experiment |
| JEL: | C91 G11 M41 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:rwirep:487&r=acc |
| By: | Stephen Calabrese; Dennis Epple; Richard Romano |
| Abstract: | We examine majority choice of tax instruments in single- and multi-jurisdictional economies with heterogeneous households. In our framework majority voting equilibrium exists despite the multidimensional policy choice set. We identify five competing incentives that influence choice of tax instruments. Equilibria generally entail a mixture of tax types. With multiple jurisdictions, strong reliance on head taxation in rich communities arises to deter poorer households from immigrating. Mobility fundamentally affects the equilibrium tax system with redistribution incentives dominating choice of instruments when mobility is limited. Limiting or eliminating head taxation fundamentally alters stratification, public good provision levels, and tax systems. |
| JEL: | H2 H71 |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:21231&r=acc |
| By: | Breidenbach, Philipp; Kasten, Tanja |
| Abstract: | Das deutsche Umsatzsteuersystem ist sehr komplex. Viele der zahlreichen Ermäßigungstatbestände, beispielsweise der reduzierte Mehrwertsteuersatz für Blumen und Beherbergungsleistungen, sind schwer nachvollziehbar und in der Handhabung kompliziert. Die ursprüngliche Intention, vor allem Geringverdiener durch eine geringere Besteuerung von Gütern und Dienstleistungen des täglichen Bedarfs zu entlasten, wird in der heutigen Ausgestaltung nicht erreicht. Bisher sind allerdings alle Reformbemühungen auf politischer Ebene gescheitert. Eine Studie des RWI zeigt, dass es ökonomisch sinnvoll ist, den ermäßigten Steuersatz vollständig abzuschaffen und gleichzeitig den Regelsatz aufkommensneutral auf 16,7% zu senken. Ein einheitlicher Umsatzsteuersatz würde nicht nur Abgrenzungsprobleme beseitigen, sondern auch zu Effizienzgewinnen bei Unternehmen, Konsumenten und Steuerverwaltung führen. Die durchschnittliche Umsatzsteuerbelastung von Geringverdienern wäre zwar geringfügig höher, eine Anpassung des einkommensteuerlichen Grundfreibetrags könnte diesen Nachteil jedoch merklich abschwächen. |
| Abstract: | The German Value-Added Tax (VAT) system is very complex. In addition to the general VAT rate of 19 percent, a reduced rate of 7 percent is levied on numerous items such as food, books, periodicals, flowers, and local public transport. Furthermore, some goods and services (such as banking and health care services or community work) are exempted from the VAT. The complexity of taxation rules and exemptions triggered many discussions on the need and potential of a VAT reform, but to date, all attempts to simplify the system have failed. However, a study by the RWI for the German Federal Ministry of Finance shows that a revenue neutral tax reform which introduces a single tax rate may increase efficiency and reduce administrative effort markedly. The average tax burden of those who earn less would increase too, but only to a moderate extent. This could be balanced by countervailing adjustments within the tax system. |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:rwipos:61&r=acc |
| By: | Lipatov, Vilen; Weichenrieder, Alfons J. |
| Abstract: | In the EU there are longstanding and ongoing pressures towards a tax that is levied on the EU level to substitute for national contributions. We discuss conditions under which such a transition can make sense, starting from what we call a "decentralization theorem of taxation" that is analogous to Oates (1972) famous result that in the absence of spill-over effects and economies of scale decentralized public good provision weakly dominates central provision. We then drop assumptions that turn out to be unnecessary for this results. While spill-over effects of taxation may call for central rules for taxation, as long as spill-over effects do not depend on the intra-regional distribution of the tax burden, decentralized taxation plus tax coordination is found superior to a union-wide tax. |
| Keywords: | fiscal federalism,taxing rights,decentralization theorem |
| JEL: | H21 H77 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:safewp:105&r=acc |
| By: | Farley Grubb (Department of Economics, University of Delaware) |
| Abstract: | The spending obligations and revenue sources of colonial New Jersey's provincial government for the years 1704 through 1775 are reconstituted using forensic accounting techniques from primary sources. Such has not been done previously for any British North American colony. These data are used to assess colonial New Jersey's provincial fiscal structure. The methods for raising revenue to meet normal peacetime and emergency wartime expenses are identified and analyzed. The provincial tax burdens imposed on New Jersey's subjects are calculated. How the British interfered with New Jersey's provincial fiscal structure is identified. What revenues and tax burdens would have been without this interference are estimated. |
| Keywords: | balanced budgets, bills of credit, forensic accounting, land banks, paper money, zero-coupon bonds |
| JEL: | E42 E60 H20 H60 N11 N21 N41 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:dlw:wpaper:15-08&r=acc |