nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2015‒11‒01
nine papers chosen by
Alexander Harin
Modern University for the Humanities

  1. Analysis of the impact of goodwill impairment information on corporate value By Nami Shimada; Toshimichi Homma
  2. Dynamic Elasticities of Tax Revenue: Evidence from the Czech Republic By Tomas Havranek; Zuzana Irsova; Jiri Schwarz
  4. National Income Taxation and the Geographic Distribution of Population By Hildegunn Stokke; Jørn Rattsø
  5. Tax Reporting Behavior: Underreporting Opportunities and Prepopulated Tax Returns By David Bruner; Michael Jones; Michael McKee; Christian Vossler
  6. Creation and Development of Corporate Retirement Systems in the Russian Federation By Maleva, Tatyana Mikhailovna; Gorlin, Yury Mikhailovich; Nazarov, Vladimir; Grishina, Elena E.; Kirillova, M. K.; Fedorov, Valery V.
  7. Asymmetric credit growth and current account imbalances in the euro area By Unger, Robert
  8. Does tax enforcement counteract the negative effects of terrorism? A case study of the Basque country. By Luca Salvadori
  9. Earnings Management to Avoid Delisting from a Stock Market By Ales Cornanic; Jiri Novak

  1. By: Nami Shimada (University of Marketing and Distribution Sciences); Toshimichi Homma (Osaka University of Economics)
    Abstract: Arguments about goodwill accounting arising from business combinations became increasingly active since FASB and IASB changed goodwill accounting from "amortization and impairment" to “impairment-only". On the other hand, as a general rule, the Japan Generally Accepted Accounting Principles (JGAAP) applies amortization from a period of up to 20 years using the straight line method. This is a major cause of the financial results of the JGAAP differing from international accounting standards and this issue has been a topic of great interest in the business world.Although Accounting Standards Board of Japan (ASBJ) was considering goodwill accounting, they decided to continue to use the amortization method because many investigations and reviews began to point out problems of the approach. In 2014, ASBJ published a discussion paper with European Financial Reporting Advisory Group (EFRAG) and Organismo Italiano di Contabilità (OIC) and suggested a reintroduction of the amortization method.Problems with “impairment-only” accounting include accounting methods and disclosure methods, but the usefulness of disclosed information is a particularly important issue. In this study, we investigate the usefulness of goodwill impairment information in regard to these problems. Specifically, its impact has been analyzed by using the method of event study based on the type of information and industry.News about goodwill impairment varies, and in some cases different information is reported in the same article. Therefore, we divided the information into three types. The first is the news where goodwill impairment information of goodwill was reported alone, the second where information reported in the same article is good news, and the third is bad news.Results of analysis of all samples confirmed that the negative impact of goodwill impairment news on stock price lasts at least 5 business days, namely one week. Concerning results of analysis based on the type of the information, the impact was the strongest and lasted the longest in the case of bad news. Finally, results of analysis divided into manufacturing and non-manufacturing confirmed the information impact in both industries, and the impact of manufacturing is stronger and lasts longer. These results showed that goodwill impairment information has a negative impact on corporate value in Japan.
    Keywords: goodwill accounting, impairment, amortization
    JEL: M00 M41
  2. By: Tomas Havranek (Institute of Economic Studies, Faculty of Social Sciences, Charles University in Prague, Smetanovo nábreží 6, 111 01 Prague 1, Czech Republic; Czech National Bank); Zuzana Irsova; Jiri Schwarz (Institute of Economic Studies, Faculty of Social Sciences, Charles University in Prague, Smetanovo nábreží 6, 111 01 Prague 1, Czech Republic)
    Abstract: Key parameters for the modeling of public finances are tax revenue elasticities with respect to tax bases. Yet the existing studies estimating these elasticities for emerging countries disregard the effects of tax reforms on tax revenue, which renders their estimates inconsistent. We use a unique data set from the Czech Republic to account for the effects of reforms and estimate both short- and long-run tax revenue elasticities. Our results suggest that the long-run elasticities are 1.4 for wage tax, 0.9 for value added tax, and 1.7 for profit tax. The adjustment process for value added tax is fast, but for the remaining two categories it is important to distinguish between the short- and long-run elasticities: the initial response of revenue to changes in the bases is weak. In the case of wage tax it takes half a year for the elasticity to surpass unity.
    Keywords: Tax revenue, tax base, elasticity, error correction models
    JEL: H24 H25 H27
    Date: 2015–10
  3. By: Dóra Diána Horváth (University of Miskolc)
    Abstract: In my research I shall examine the current level of the CSR activities and strategies of the Hungarian financial sector based on the analysed data. I expect to prove that banks consider CSR as a factor of strategic importance and their scope of used CSR tools could be broaden. I shall present that Hungarian CSR practices of banking sector differs from other sectorsï CSR activities and from the internationally applied strategies. The concept of corporate social responsibility is not new in the banking sector, but nowadays, it becomes highly topical since the crisis has significantly highlighted the need for integration of moral principles in the banking business. Knowledge of business practice indicates the fact that the acceptance of moral principles in business is not integrated into management decisions of companies. Management of a banking organization should have appropriate policy in place for establishing positive organizational culture and social responsible mindset of staff members. If commitment for becoming a social responsible banking organization between management and staff, and accountability and creditability can be demonstrated through effective and efficient internal audit, customers and the community will be benefited with risks reduced and quality enhanced. Banks should involve their employees in CSR acticities, because they will be more committed for the organization.
    Date: 2015–10–15
  4. By: Hildegunn Stokke; Jørn Rattsø
    Abstract: Income taxation may affect the regional allocation of population when prices vary over space. Our contribution is to compare different income tax systems in a migration equilibrium model for Norway using improved measure of regional wage differences. We apply register data of individual wages for the entire population to identify wage differences, while controlling for both observable and unobservable worker characteristics and allowing for dynamic learning effects on wages. We estimate regional differences in cost of living based on detailed data on housing prices. The model is calibrated to the current nominal income tax system and compared to an undistorted equilibrium without income tax. We investigate two alternative tax systems: Real income taxation where the real tax burden is proportional to real wages and equal real taxes across regions motivated by taxation of amenities. The numerical simulations document large shifts in the regional distribution of the population as the result of income taxation. The elasticity of population with respect to tax payments comes out with a value of -2.64. Nominal income taxation creates a disincentive to locate in productive high-wage regions, and generates a deadweight loss due to locational inefficiencies equal to 0.028% of income. Real income taxation gives a geographic distribution of the population closer to the undistorted equilibrium, and hence with lower deadweight loss, while equal real taxes is the least efficient tax system.
    Keywords: Income taxation; regional taxation; cost of living; amenities
    JEL: H24 H77 J61 R23
    Date: 2015–10
  5. By: David Bruner; Michael Jones; Michael McKee; Christian Vossler
    Abstract: Key Words:
    Date: 2015
  6. By: Maleva, Tatyana Mikhailovna (Russian presidental academy of national economy and public administration (RANEPA)); Gorlin, Yury Mikhailovich (Russian presidental academy of national economy and public administration (RANEPA)); Nazarov, Vladimir (Russian presidental academy of national economy and public administration (RANEPA)); Grishina, Elena E. (Russian presidental academy of national economy and public administration (RANEPA)); Kirillova, M. K. (Russian presidental academy of national economy and public administration (RANEPA)); Fedorov, Valery V. (Russian presidental academy of national economy and public administration (RANEPA))
    Abstract: This paper focused on the analysis of the following tasks: 1. An overview of legislation in terms of the functioning of the corporate pension system in the Russian Federation was performed; 2. The basic terms and definitions used in corporate pension schemes were overviewed; 3. Review of corporate pension schemes in countries such as USA, UK, Germany, France, Belgium, Ireland, New Zealand, South Korea, China, Hong Kong, Taiwan, Japan, Mexico and Brazil were analyzed; 4. Review of key global trends in the development of corporate pension systems were highlighted and addressed; 5. Analysis of the corporate pension system in the Russian Federation in 1990-2000-s was performed, including the change of the basic characteristics; 6. Analysis of the corporate pension system in the Russian Federation; 7. Analysis os issues hindering the development of the corporate pension system in the Russian Federation; 8. Provide key proposals for the development of the corporate pension system in the Russian Federation, taking into account international experience and recommendations of international organizations such as the Organization for Economic Cooperation and Development, the International Organization for Standardization, International Association of Insurance Supervisors and others. 9. Main results of this work will be used in the formation of proposals for the establishment of mechanisms and incentives for the creation and development of the corporate pension system in the Russian Federation.
    Keywords: pension reform, retirement age, corporate retirement systems, Russian economy
    Date: 2014–08–09
  7. By: Unger, Robert
    Abstract: The euro area crisis is often linked to the emergence of current account imbalances. As most of the deficit countries experienced pronounced credit booms at the same time that these imbalances were building up, this paper investigates the link between domestic credit developments and the current account balance, distinguishing between a credit pull and a credit push factor. The pull factor captures flows of bank loans to the domestic non-financial private sector. An increase in these flows is expected to lead to higher domestic demand and a deterioration of the current account. The push factor measures flows of claims of domestic banks on debtors in other euro-area countries, and an increase is expected to lead to higher external demand and an improvement in the current account. Using a panel error correction specification, the estimation results confirm that the pull factor is a significant determinant of the current account, whereas the results for the push factor are less clear-cut. The paper also shows that variations in the flows of bank loans to the non-financial private sector (i.e. the pull factor) - together with changes in competitiveness - constituted the most important factor driving the build-up of current account imbalances in the deficit countries. Accordingly, impeding an increase in private sector indebtedness seems to be a promising way to dampen the formation of unsustainable current account imbalances.
    Keywords: banks,credit growth,current account imbalances,euro area
    JEL: E5 F32
    Date: 2015
  8. By: Luca Salvadori
    Abstract: ABSTRACT: This paper analyses the impact of terrorism on tax enforcement policies by focusing on the case of the Basque Country. The presence of externalities in tax administration attributable to the costs of terrorism is investigated by undertaking a theoretical analysis. The findings of this are tested using Spanish data extracted from repeated surveys and other sources. By employing ordered response models, evidence is found of the negative impact of terrorism on tax enforcement as it is perceived by residents in the Basque Country and Navarre. In particular, this impact is found to be stronger for entrepreneurs and liberal professionals. No significant impact is found for individuals resident in the rest of Spain. MAIN RESULT: This study provides evidence of the fact that the tax administrations of the Basque Country and Navarre employ tax enforcement as an instrument to counter the negative impact that terrorist activity has on tax bases, tax revenues and, in short, on the economy as a whole. This result suggests that previous estimations of the impact of terrorism on the Basque economy are implicitly calculated net of the impact of terrorism on tax administration and, thus, they could be considered as lower bound approximations of the actual net effect of this shock on the Basque economic outcomes.
    Keywords: tax administration and auditing; fiscal externalities; terrorism
    JEL: H83 H23 D74
    Date: 2015–10
  9. By: Ales Cornanic (Institute of Economic Studies, Faculty of Social Sciences, Charles University in Prague, Smetanovo nábreží 6, 111 01 Prague 1, Czech Republic); Jiri Novak (Institute of Economic Studies, Faculty of Social Sciences, Charles University in Prague, Smetanovo nábreží 6, 111 01 Prague 1, Czech Republic)
    Abstract: We show that firms ‘in danger’ of being delisted from a stock market (NASDAQ) report higher performance-adjusted discretionary accruals and the inflated accruals are associated with an increased likelihood of maintained listing. Accruals of firms ‘in danger’ are less positive in fiscal quarters audited by a Big-4 auditor and after the implementation of SOX. In contrast, accruals are higher for firms that benefit most from public listing and for firms with good future prospects. This suggests that managers consider reputation and litigation risk associated with earnings management and they manage earnings only when they believe the firm will recover in near future. The market can thus interpret discretionary accruals as a signal revealing managers’ private information about firm quality. Consistent with the signaling explanation we observe a stronger stock price reaction on the announcement of earnings that contain large accruals in threatened firms.
    Keywords: Delisting, earnings management, discretionary accruals, insider trading, reverse stock split, audit, Sarbanes-Oxley Act
    Date: 2015–08

This nep-acc issue is ©2015 by Alexander Harin. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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