nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2015‒07‒18
nine papers chosen by
Alexander Harin
Modern University for the Humanities

  1. Compliance with Endogenous Audit Probabilities By Kai A. Konrad; Tim Lohse; Salmai Qari
  2. Fiscal Rules and Twin Deficits: The Link between Fiscal and External Balances By Harald Badinger; Aurélien Fichet de Clairfontaine; Wolf Heinrich Reuter
  3. Corporate Tax Policy and Industry Location with Fully Endogenous Productivity Growth By Colin Davis; Ken-ichi Hashimoto
  4. Reforming International Taxation: Is the Process the Real Product? By Richard M. Bird
  5. EU policies addressing current account imbalances in the EMU: an assessment By Nina Dodig; Hansjorg Herr
  6. The Effect of Savings Accounts on Interpersonal Financial Relationships: Evidence from a Field Experiment in Rural Kenya By Pascaline Dupas; Anthony Keats; Jonathan Robinson
  7. Investigating public financial accounts and coding system in Malawi and measuring agricultural expenditures within the system: By Mwabutwa, Chance
  8. Fiscal policies in the European Union during the crisis, By Jesus Ferreiro; Catalina Galvez; Ana Gonzalez
  9. The Development of Corporate Governance in Toulouse: 1372-1946 By David Le Bris; William N. Goetzmann; Sébastien Pouget

  1. By: Kai A. Konrad; Tim Lohse; Salmai Qari
    Abstract: This paper studies the effect of endogenous audit probabilities on reporting behavior in a face-to-face compliance situation such as at customs. In an experimental setting in which underreporting has a higher expected payoff than truthful reporting we find an increase in compliance of about 80% if subjects have reason to believe that their behavior towards an officer influences their endogenous audit probability. Higher compliance is driven by considerations about how own appearance and performance affect their audit probability, rather than by social and psychological effects of face-to-face contact.
    Keywords: Compliance, audit probability, tax evasion, face value, customs
    JEL: H26 H31 C91 K42
    Date: 2015
  2. By: Harald Badinger (Department of Economics, WU Vienna); Aurélien Fichet de Clairfontaine (Department of Economics, WU Vienna); Wolf Heinrich Reuter (Department of Economics, WU Vienna)
    Abstract: This paper investigates the relationship between countries' fiscal balances and current accounts with an emphasis on the role of fiscal rules. The direct effect of fiscal policy on the current account via aggregate (import) demand is potentially amplified by indirect effects, materializing through interest rate effects and inter-generational transfers that reduce savings. On the other hand, the implied positive relation between fiscal and external balances is potentially attenuated by offsetting changes in savings through Ricardian equivalence considerations. We expect this attenuation effect to be stronger in countries with more stringent fiscal rules and test this hypothesis using a panel of 73 countries over the period 1985-2012. As previous studies we find a positive effect of fiscal balances on the current account, supporting the twin deficit hypothesis. However, the effect of fiscal balances on the current account depends on the stringency of fiscal (budget balance or debt) rules in place; it is reduced by one third on average and virtually eliminated for countries with the most stringent fiscal rules.
    Keywords: Twin Deficits, Fiscal Policy, Fiscal Rules, Current Account
    JEL: E62 F32 F41
  3. By: Colin Davis (The Institute for the Liberal Arts, Doshisha University); Ken-ichi Hashimoto (Graduate School of Economics, Kobe University)
    Abstract: This papers considers how national corporate tax policy affects productivity growth through adjustments in geographic patterns of industry in a two-country model of trade. With trade costs and imperfect knowledge spillovers between countries, production concentrates partially and innovation concentrates fully in the country with the lowest tax rate. When firms have weak (strong) monopoly power, a decrease in the tax rate of the low-tax-rate country depresses (accelerates) productivity growth. The paper also investigates the relationship between relative tax rates and the level of product variety, and analytically characterizes the effects of changes in tax policy on national welfare.
    Keywords: National Corporate Tax Policy, Fully Endogenous Productivity Growth, Monopoly Power, Industry Concentration
    JEL: F43 O30 O40 R12
    Date: 2015–07
  4. By: Richard M. Bird (University of Toronto)
    Abstract: The reform of international taxation -- how national tax systems interact with each other – is an issue that is always technically complex, often economically significant, and sometimes politically explosive. Some expect major changes in international taxation in the near future but no one yet knows what changes might made or when, how, and how effectively they might be implemented. Instead of speculating about such matters, this paper considers the process by which countries are attempting to reform international taxation problems, essentially through complex technical and political negotiations intended to produce an improved set of “soft” law arrangements, adherence to which will, as in the present system, be essentially voluntary. The current process, although under the aegis of the OECD, is considerably more inclusive than earlier negotiations on international taxation, which were largely between developed countries that were predominantly capital exporters. Greater inclusivity may make negotiations more difficult to conclude successfully but it may also result in a system that will be more widely accepted as fair. Moreover, experience gained through the present prolonged and intensive negotiations on international taxation may perhaps suggest a more fruitful approach to dealing with such other “global public goods” problems as climate change.
    Date: 2015–06–16
  5. By: Nina Dodig (Berlin School of Economics and Law and Institute for International Political Economy (IPE) Berlin, Germany); Hansjorg Herr (Berlin School of Economics and Law and Institute for International Political Economy (IPE) Berlin, Germany)
    Abstract: To handle the sovereign debt crisis in general and macroeconomic imbalances in particular the leading EU institutions (the Troika) adopted two broad approaches; The short-term approach is based on enhancing the Stability and Growth Pact and to impose fiscal austerity on crisis countries. The medium- to long-term strategy consists of internal devaluation via reducing wage costs. Both approaches were combined with structural adjustment programs in the spirit of the Washington Consensus. The Troika’s policy implies an asymmetric adjustment process burdening only crisis countries. They led to the shrinking of demand and output in crisis countries comparable to the Great Depression and brought the European Monetary Union to the edge of deflation. These polices must be judged as mislead increasing the risk of Japanese disease with more than one lost decade
    Keywords: current account imbalances, Euro area economic policies, internal devaluation, austerity
    JEL: E60 E62 F41
    Date: 2015–01–01
  6. By: Pascaline Dupas; Anthony Keats; Jonathan Robinson
    Abstract: The welfare impact of expanding access to bank accounts depends on whether accounts crowd out pre-existing financial relationships, or whether private gains from accounts are shared within social networks. To study the effect of accounts on financial linkages, we provided free bank accounts to a random subset of 885 households. Within households, we randomized which spouse was offered an account and find no evidence of negative spillovers to spouses. Across households, we document positive spillovers: treatment households become less reliant on grown children and siblings living outside their village, and become more supportive of neighbors and friends within their village.
    JEL: C93 D14 G21 O16
    Date: 2015–07
  7. By: Mwabutwa, Chance
    Abstract: This paper is one of the four diagnostic studies initiated to better understand the black box of public expenditure statistics and how it varies across countries. Particularly, this paper analyzes how government expenditures in agriculture are captured in Malawi’s public financial accounts. It is anticipated that by providing a clear exposition of the manner in which public agriculture expenditures are identified and aggregated using the existing coding structure, this paper would facilitate easy understanding of the levels and composition of the public agricultural expenditures. Such an understanding would ultimately be necessary for determining the link between such allocations and their impact on agricultural growth and hence economic growth. The report starts with a brief background on reforms in the public financial accounts starting with the adoption of the structural adjustment in the 1980s. This is followed by an analysis of the budget and expenditure classification and coding system and a description of the public agriculture expenditure in Malawi. The consolidation and aggregation of data are based on the administrative, program, economic, and functional classification. One of the main findings show that overtime reforms to classification and coding system ensured compliance to international standards as provided in the 2001 Government Finance Statistics of International Monetary Fund and better linkages of expenditure items to the Malawi Growth and Development Strategy.
    Keywords: public expenditure, agricultural sector, investment, classification, coding system,
    Date: 2015
  8. By: Jesus Ferreiro (Department of Applied Economics V, University of the Basque Country UPV/EHU); Catalina Galvez (Department of Applied Economics V, University of the Basque Country UPV/EHU); Ana Gonzalez (Department of Applied Economics V, University of the Basque Country UPV/EHU)
    Abstract: The paper studies the fiscal policies implemented in the European Union countries since the beginning of the current crisis. With this aim in mind, we have analyzed separately the expansionary fiscal policies implemented at the first stage of the crisis and the fiscal consolidation policies that became widespread at the beginning of the current crisis. The content of the national fiscal policies (discretionary measures versus built-in stabilizers, revenue-based versus expenditure-based fiscal policies, the relationship existing between the size of the fiscal impulses-adjustments and the composition of these measures) shows the significant differences between the fiscal policies implemented in the European Union countries.
    Keywords: European Union, fiscal policy, economic crisis.
    JEL: E62 E65 H62 O52
    Date: 2015–02–01
  9. By: David Le Bris; William N. Goetzmann; Sébastien Pouget
    Abstract: We document a sequence of institutional innovations associated with the corporate form over the course of several centuries in Toulouse. Shareholding companies that began in the 11th century formally incorporated themselves into two large-scale, widely held firms by 1373. In the years that followed they experienced the economic challenges and conflicts we now recognize as inherent in the separation of ownership and control. Using new and existing archival research, we show how the Toulouse firms developed institutional solutions including tradable shares, limited liability, governing boards, cash payout policies, external audits, shareholder meetings and mechanisms for re-capitalization. We examine these developments in the context of institutional economic theory and the received history of the corporation. The Toulouse companies preceded the birth of the Dutch and English East India companies by centuries. The Toulouse firms shed light on the necessary and sufficient conditions for the development of the corporate form. We show that the constellation of features associated with the corporation can appear in situations of relative economic certainty and in the context of Medieval legal code that did not require the granting of governmental approval or patent. The Toulouse firms are a unique case in which the corporation appears as a nexus of private contracts.
    JEL: G30 G34 G35 N0 N2 N8 N83 O16 P1
    Date: 2015–07

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