nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2015‒06‒20
eight papers chosen by
Alexander Harin
Modern University for the Humanities

  1. Corporate tax in an international environment - Problems and possible remedies By Seppo Kari
  2. Going Concern Research Assessment for Quoted Romanian Agricultural Companies By Flavia Stoian; Geanina Gabriela Tudose; Grazia-Oana Petroianu; DANIELA NICOLETA MEDINTU
  3. Financial Soundness Index for the Private Corporate Sector in Colombia By Juan S. Lemus-Esquivel; Carlos A. Quicazán-Morenoy; Jorge L. Hurtado-Guarínz; Angélica Lizarazo-Cuéllarx
  4. ANALYSIS FINANCIAL BALANCE AS BASE MANAGEMENT COMPANY By Dragan Mihajlovic, Svetislav Stankovic, Milos Nikolic
  5. The Impact of Double Tax Treaties on Foreign Direct Investments: Evidence from Turkey’s Outward FDIs By Sava Çevik; Mehmet Okan Ta
  7. Measuring the On-Going Changes in China's Capital Flow Management: A De Jure and a Hybrid Index Data Set By Jinzhao Chen; Xingwang Qian
  8. Economic Importance Of The Belgian Ports : Flemish maritime ports, Liège port complex and the port of Brussels – Report 2013 By Frank Van Nieuwenhove

  1. By: Seppo Kari
    Abstract: This paper addresses the problems of corporate taxation in a globalized world. It first illustrates recent trends in international practices and then reviews the literature on the effects of corporate taxes in closed and open economies. The paper emphasizes the severity of the problems caused by current international tax rules. It compares various national and international policy proposals and considers two recent Nordic tax reform proposals as examples of national-level solutions. The problems of current international corporate taxation are fundamental. Introducing increasingly tight anti-avoidance measures could serve as a medium term approach but does not provide any promising long-term solution. There should be more research concerning initiatives that would reform the fundamental principles of the international tax system.
    Keywords: corporation tax, international taxation, multinational firms, tax avoidance
    JEL: H87 H32 F23 H25
    Date: 2015–03–17
  2. By: Flavia Stoian (The Bucharest University of Economic Studies, Romania); Geanina Gabriela Tudose („Constantin Brancoveanu” University of Pitesti, Romania); Grazia-Oana Petroianu (The Bucharest University of Economic Studies, Romania); DANIELA NICOLETA MEDINTU (The Bucharest University of Economic Studies, Romania)
    Abstract: In a world without frontiers, the need for financial information is becoming greater and greater, being considered the main control instrument in economic activities.The transparency of financial information cannot be achieved without accountancy and audit contribution, main factors in identifying the observance of going – concern assumption.Moreover the financial crisis may determine the risk increase which affects the proper development of business, in general and of agricultural activities, in particular. This increase in risk may be interpreted as a greater uncertainty as regards the agricultural companies capacity to continue their activity. The purpose of the paper is to demonstrate the logical connection between the observance of going concern principle in agricultural activities with the decrease of bankruptcy risk. The necessity to predict the bankruptcy risk is relevant not only for governance and company management but also for all other participants in the social act which interferes with the company. Therefore, the continuation of activity can be assessed by different methods applied to annual financial situations. The analysis is achieved both by using accounting methods and also by financial statistic methods. The present day economic life makes the audit resort to these methods of scientific and statistical analysis, directing the audit to another method – the metric audit. The scientific – technical basis of this paper is given by the research regarding the necessity of going concern – an element of risk management.In order to make this research there have been used information and specialety reference materials. In order to attain the proposal objective there has been used a methodology of fundamental research as regards risk character.
    Keywords: going concern, bankruptcy risk, governance, financial statistic methods, scoring-function, metric audit
    JEL: M41 M42 M49
  3. By: Juan S. Lemus-Esquivel (Banco de la República de Colombia); Carlos A. Quicazán-Morenoy (Banco de la República de Colombia); Jorge L. Hurtado-Guarínz (Banco de la República de Colombia); Angélica Lizarazo-Cuéllarx (Banco de la República de Colombia)
    Abstract: This paper evaluates the importance of building a composite metric of financial soundness for the private corporate sector in Colombia. Instead of relying on the individual and sometimes restrictive financial ratio analysis approach, the purpose of this document is to provide a single metric aimed at measuring the financial health of firms. Said metric, the fiancial soundness index, is derived by employing the crosssection approach of principal component analysis. For the time period of 2000-2013,the results allow to identify which industries have a weak, strong or similar balance sheet performance relative to that observed for the private corporate sector as a whole. Furthermore, validation tests on the index confirm the apparent relationship between accounting data of private firms that are debtors of the Colombian financial system and the credit risk perception of and materialization for financial intermediaries.
    Keywords: Frms' financial soundness, principal component analysis, financial ratios, composite indices, financial stability
    JEL: L25 G30 G32 C3
  4. By: Dragan Mihajlovic, Svetislav Stankovic, Milos Nikolic (Megatrend University, Faculty of Management, Zajecar, Military Academy, Belgrade, College of Applied Studies, Vranje)
    Abstract: The financial position is determined by the state of financial balance, indebtedness, solvency, maintaining the real value of the capital and reproductive capacity. The company has a good financial position if financial balance ensures the safety of the maintenance of liquidity, if the debt provides full independence the company and good safety of its creditors. The financial balance assumes that the assets, which cannot be paid, by volume and time correspond to the scope and time to availability of the funding. Therefore, the analysis of financial balance is reduced to the analysis of short-term financial equilibrium and analysis of long-term financial balance. Analysis of the short-term and long-term financial balance refers to the balance sheet. Analysis of the short-term and long-term financial equilibrium requires that the official (prescribed) balance sheet analysis is adjusted to the analysis of short-term and long-term financial balance. The analysis of financial balance assesses liquidity and requirements for liquidity, which is, in fact, assess the financial situation in the narrow sense. Assessment of the financial situation in the broader sense requires the analysis of debt. Short-term financial equilibrium is determined by the ratio of liquid assets and short-term limited assets, on the one hand and short-term liabilities on the other.
    Keywords: analysis of financial results, analysis of financial position, financial balance, liquidity, balance sheet
    JEL: M41
    Date: 2015–03
  5. By: Sava Çevik (Selcuk University, Faculty of Economics and Administrative Sciences, Department of Economics); Mehmet Okan Ta (Selcuk University, Faculty of Economics and Administrative Sciences, Department of Economics)
    Abstract: Double tax treaties (DTT) are mainly signed to overcome the problem of international double taxation and to coordinate national tax systems in bilateral or multilateral economic interactions. However, one more reason to engage in DTTs is to facilitate international economic flows for capital especially and to attract foreign capital. To increase foreign direct investment (FDI) is a desirable policy goal for both developing and developed countries. In order to examine whether DDTs have significant impact on FDIs, this paper analyzes Turkey’s outward FDI stocks to 71 host countries over the period of 2001-2012. In analyses, we use Turkey’s FDI stock toward the host countries as dependent variable. In addition a number of control variables, we analyze the impact of a dummy of presence of DTTs and the age of treaty. As the estimation technique, we mainly use fixed effect estimators and regressions with panel-corrected standard errors (PCSE) to handle heteroskedasticity and autocorrelation, in addition to some other specifications for robustness aims. After controlling for various determinants of bilateral FDI stocks, the study’s results show that DTTs are indeed positively associated with foreign investment toward the host country from Turkey. This finding supports policy considerations on the impact of DTTs on FDIs. The results hold for various of specifications.
    Keywords: double tax treaties, foreign direct investments, international double taxation
    JEL: H87 F21 H25
  6. By: Bak (Aksaray University); Süleyman Koç (Aksaray University)
    Abstract: Current account deficit (CAD) is particularly the main vulnerability of Turkish economy in the post 2001 crises period. High level of CAD/GDP ratio was a crisis indicator for Turkish economy but this remarkable indicator can not cause any crisis despite of 5 percent period mean value in the post 2001 crisis era. In this study we try to determine dynamic relationship among CAD, real effective exhange rate (REER) and economic growth in Turkey by using Vector Autoregression (VAR) method in the 2003Q1-2014Q3 period. Based on the estimated VAR model, impulse-response functions and forecast error variance decompositions shows that current account deficit (CAD) is a strong determiner of economic growth in Turkey. We also found that CAD and REER are granger cause of economic growth in Turkish economy.
    Keywords: Current Account Deficit, Vector Autoregression, Growth, Real Exchange Rate, Turkish economy.
    JEL: C32 F32 F31
  7. By: Jinzhao Chen (The University of Hong Kong); Xingwang Qian (SUNY Buffalo State and Hong Kong Institute for Monetary Research)
    Abstract: Liberalizing China's capital account may have profound implications for the RMB exchange rate, monetary policy autonomy, and Chinese and the world economy. Owing to the scarcity of proper measurements of China's capital controls, rigorous studies on the effectiveness and implications of China's capital controls are limited. We contribute to the literature by creating a new data set of indices including de jure and hybrid measurements of the changes in China's capital controls, hoping to inspire a new avenue of research in this area. In contrasting to other capital control indices that are compiled in a yes-or-no style, we quantify the intensity of changes in China's capital controls. Our indices reveal a persistent but uneven process of capital account liberalization in China between 1999 and 2012. This paper describes the de jure and hybrid indices, including indices for capital controls on individual asset categories, gross flows, inflows and outflows, as well as for residents and nonresidents asset transactions. Understanding that China usually implements policies in a step by step gradualist style, we extract those gradual information from the lines of the text in the IMF's Annual Report on Exchange Arrangement and Exchange Restrictions (AREAER) and some supplementary material from other sources.
    Keywords: Capital Flows, China's Capital Controls, De Jure Index, Hybrid Index
    JEL: C82 F15 F21
    Date: 2015–05
  8. By: Frank Van Nieuwenhove (National Bank of Belgium)
    Abstract: This paper is an annual publication issued by the Microeconomic Analysis service of the National Bank of Belgium. The Flemish maritime ports (Antwerp, Ghent, Ostend, Zeebrugge), the Autonomous Port of Liège and the port of Brussels play a major role in their respective regional economies and in the Belgian economy, not only in terms of industrial activity but also as intermodal centres facilitating the commodity flow. This update paper1 provides an extensive overview of the economic importance and development of the Flemish maritime ports, the Liège port complex and the port of Brussels for the period 2008 - 2013, with an emphasis on 2013. Focusing on the three major variables of value added, employment and investment, the report also provides some information based on the social balance sheet and an overview of the financial situation in these ports as a whole. These observations are linked to a more general context, along with a few cargo statistics. Annual accounts data from the Central Balance Sheet Office were used for the calculation of direct effects, the study of financial ratios and the analysis of the social balance sheet. The indirect effects of the activities concerned were estimated in terms of value added and employment, on the basis of data from the National Accounts Institute. As a result of the underlying calculation method the changes of indirect employment and indirect value added can differ from one another. The developments concerning economic activity in the six ports in 2012 - 2013 are summarised in the table on the next page. The overall decline in maritime traffic seen in the Flemish maritime ports in general in 2012, and in each individual port, was reversed in 2013, but only thanks to growth in Antwerp; the other three ports (Ghent, Ostend and Zeebrugge) experienced a further decrease. In terms of value added, the opposite occurred: a general increase, except in Antwerp, resulting in a slight rise for these ports as a whole. The employment picture was variable, but there was expansion overall, matching the growth of value added, namely 0.3 %. Finally, investment in the Flemish ports declined overall, totalling 3.2 % less in 2013 than in the previous year. In the ports of Liège and Brussels, cargo traffic and employment both declined in 2013. After the sharp fall in 2012, value added at the port of Liège edged upwards again, but in Brussels it recorded a significant decline2. Conversely, investment in Liège was down again, following the surge in 2012, whereas the port of Brussels saw a substantial increase. This report provides a comprehensive account of these issues, giving details for each economic sector, although the comments are confined to the main changes that occurred in 2013.
    Keywords: branch survey, maritime cluster, subcontracting, indirect effects, transport, intermodality, public investments
    JEL: C67 H57 J21 L22 L91 L92 R15 R34 R41
    Date: 2015–06

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