nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2015‒12‒08
ten papers chosen by
Alexander Harin
Modern University for the Humanities

  1. The Determinants of Effective Tax Rates: Firms’ Characteristics and Corporate Governance By Ana Isabel Martins Ribeiro; António Cerqueira; Elísio Brandão
  2. Study to quantify and analyse the VAT GAP in the EU member states By Luca Barbone; Mikhail Bonch-Osmolovskiy; Grzegorz Poniatowski
  3. The grand divergence: global and European current account surpluses By Zsolt Darvas
  4. Virginia Local Tax Rates: 2013 By John Knapp; Stephen Kulp
  5. Taxation Challenges in Developing Countries By Michael Carnahan
  6. The Threat of Corruption and the Optimal Supervisory Task By Alessandro De Chiara; Luca Livio
  7. The Role of Tax Exemptions and Credits By James Alm; Bibek Adhikari
  8. Determinants of Corporate Capital Structure: Evidence from Non-financial Listed French Firms By Ana Margarida Fernandes Afonso Correia; António Melo Cerqueira; Elísio Brandão
  9. Between aritmetic and accounting : the contribution of Lazare Moulin-Collin (1792-1850) By Luc Marco; Robert Noumen
  10. Networks of value added trade By João Amador; Sónia Cabral

  1. By: Ana Isabel Martins Ribeiro (University of Porto, School of Economics and Management); António Cerqueira (University of Porto, School of Economics and Management); Elísio Brandão (University of Porto, School of Economics and Management)
    Abstract: Investors, managers and shareholders benefit from the study of what influences and determines corporate effective tax rates (ETRs) as this analysis may contribute to potential tax savings. Moreover, standard setters, regulators and policy makers have a crucial interest in identifying the main factors driving corporate taxes. Therefore, the purpose of our investigation and contribution is twofold. Firstly, we provide evidence of how ETRs are determined by firms’ financial and operational characteristics. Secondly, our objective is to show the role of Corporate Governance attributes in explaining ETRs. As the literature about this topic using non-US firms is not abundant, to address these questions we select a sample of 704 non-financial firms listed on the London Stock Exchange between 2010 and 2013. We estimate our econometric model by using GLS cross-section weights. Our results show that larger and more profitable firms have higher ETRs. On the contrary, capital intensity, leverage and R&D expenses have a negative impact on ETRs. Regarding ownership structure and board composition, our findings reveal that managerial ownership contributes to lower ETRs. On the other hand, more independent firms from controlling shareholders exhibit higher ETRs. Moreover, a larger number of board members and non-executive directors results in higher ETRs
    Keywords: Effective tax rate; Corporate Finance; Corporate Governance
    JEL: G30 H20
    Date: 2015–12
  2. By: Luca Barbone; Mikhail Bonch-Osmolovskiy; Grzegorz Poniatowski
    Abstract: Only in 2013 the EU Member States lost approximately €168 billion in VAT revenues due to non-compliance, according to a recent study conducted by the Center for Social and Economic Research (CASE) for the European Commission. The report: “Study to Quantify and Analyse the VAT Gap in the EU Member States” examines the reasons for and reality of the VAT underperformance across twenty six Member States* . Compared to 2012, EU26 saw €2.8 billion increase in VAT-GAP in absolute numbers. Overall, 15 Member States decreased their VAT Gaps, with the largest improvements noted in Latvia, Malta, and Slovakia. However, at the same time 11 Member States saw an increase in the VAT Gap, with the largest deteriorations in Estonia and Italy. Emphasizing the diversity of the EU’s tax administrations, the study estimated that the VAT non-compliance in 2013 ranged from 4% in Finland, the Netherlands, and Sweden, to as much as 41% in Romania. “The overall underperformance was due to unfavorable economic environment, as the GDP of the European Union in 2013 was nearly stagnant.” – said Grzegorz Poniatowski, one of the report’s authors – “An increase in VAT gap in 2013 can also be explained by the increasing phenomenon of ‘missing trader frauds’ and carousel frauds”. The report also provides new and expanded evidence on the Policy Gap for the EU-26. The Policy Gap is an indicator of the additional VAT revenue that a Member State could theoretically collect if it applied standard rate to all consumption of goods and services supplied for consideration. The study shows that several Member States, including Belgium, Finland, France, Greece, Ireland, Luxembourg, Netherlands, Portugal, Spain, and the United Kingdom, could collect up to 50% more revenue if they applied a unified tax on all consumption.
    Keywords: Financial sector, Europe, VAT, finance, optimal taxation
    JEL: H20 H24 H25 H26 H62
    Date: 2015
  3. By: Zsolt Darvas
    Abstract: Global current account imbalances widened before the 2007/2008 crisis and have narrowed since. While the post-crisis adjustment of European current account deficits was in line with global developments (though more forceful), European current account surpluses defied global trends and increased. We use panel econometric models to analyse the determinants of medium-term current account balances. Our results confirm that higher fiscal balances, higher GDP per capita, more rapidly aging populations, larger net foreign assets, larger oil rents and better legal systems increase the medium-term current account balance, while a larger growth differential and a higher old-age dependency ratio reduce it. European current account surpluses became excessive during the past twelve years according to our estimates, while they were in line with model predictions in the preceding three decades. Generally, the gap between the actual current account and its fitted value in the model has a strong predictive power for future current account changes. Excess deficits adjust more forcefully than excess surpluses. However, in the 2004-07 period, excess imbalances were amplified, which was followed by a forceful correction in 2008-15, with the exception of European surpluses
    Date: 2015–08
  4. By: John Knapp (Weldon Cooper Center for Public Service); Stephen Kulp (Weldon Cooper Center for Public Service)
    Abstract: This is the thirty-second edition of the Cooper Center annual publication on tax rates levied by Virginia local governments. In addition to information about tax rates, the publication contains details about tax administration, valuation methods and due dates. There is also information on water and sewer rates, waste disposal charges and numerous other aspects of local government finance. This comprehensive guide to local taxes is based on information gathered in the spring, summer, and early fall of 2013. The study includes all of Virginia's 39 independent cities and 95 counties and 133 of the 190 incorporated towns. The included towns account for 90 percent of the state population in towns. In addition to survey data, the study includes information from several outside sources, including two Department of Taxation studies, 2013 Legislative Summary and The 2011 Assessment/Sales Ratio Study, as well as Department of Taxation information on the assessed value of real estate by type of property. We also used the Comparative Report of Local Government Revenues and Expenditures, Year Ended June 30, 2012 from the state Auditor of Public Accounts, the Report on Proffered Cash Payments and Expenditures by Virginia Counties, Cities and Towns, 2011-2012 from the Commission on Local Government, and Virginia Enterprise Zone Program 2012 Grant Year Annual Report from the Department of Housing and Community Development. Additional sources included regional transportation commission information on taxes and fees.
    Keywords: Virginia; taxes; tax rates; local government
    Date: 2014–01–15
  5. By: Michael Carnahan
    Abstract: A well-functioning revenue system is a necessary condition for strong, sustained and inclusive economic development. However, the revenue systems in some developing countries have fundamental shortcomings. Using Public Expenditure and Financial Accountability assessment data, this article provides a summary of the revenue raising capabilities across 58 developing countries. Tax reforms or tax system changes need to be made mindful of that current capacity. The optimal choice of tax regime may be different when administrative capacity is low. The increasing globalisation of economic activity adds a further layer of complexity that developing countries need to manage in building and maintaining their revenue systems. Finally, any proposals to change the revenue system in a developing country need to recognise that, like developed countries, tax reforms are highly political endeavours.
    Keywords: tax policy;tax administration;tax reform;developing countries;fiscal policy
    Date: 2015–01–28
  6. By: Alessandro De Chiara; Luca Livio
    Abstract: In this paper we investigate the task the supervisor should be optimally charged with in an agency modelin which the principal faces corruption concerns. We highlight a fundamental tradeoff between monitoringthe agent’s effort choice and auditing it ex-post. Monitoring proves more effective in tackling corruptionsince the supervisor sends the report before the profit realization. By taking advantage of the supervisor’suncertainty about the state of nature, the principal can design a compensation scheme which prevents allforms of corruption at a lower cost. Conversely auditing reduces the cost of supervision as the principalhires the supervisor only if the profit does not convey enough information about the compensation due tothe agent. We show that the ultimate choice between monitoring and auditing depends on the supervisor’sability to falsify information and the cost of performing an inspection.
    Keywords: auditing; collusion; corruption; extortion; monitoring; supervision
    JEL: D82 D86 L22
    Date: 2015–10
  7. By: James Alm (Department of Economics, Tulane University); Bibek Adhikari (Department of Economics, Tulane University)
    JEL: H71 H72
    Date: 2015–12
  8. By: Ana Margarida Fernandes Afonso Correia (FEP-UP, School of Economics and Management, University of Porto); António Melo Cerqueira (FEP-UP, School of Economics and Management, University of Porto); Elísio Brandão (FEP-UP, School of Economics and Management, University of Porto)
    Abstract: This paper analyses firms’ characteristics that influence managers’ decisions about how to finance their companies. It also aims to study which financial theory better explains those decisions that affect the capital structure of the firms. Our empirical study uses panel data and OLS estimations with cross-section fixed effects and year dummy variables. The sample includes 436 non-financial listed French firms, over the period from 2007 to 2013 (3052 firm-year observations). In the empirical study to test the results’ sensitivity to the use of debt with different maturities we use two regressions and hence two dependent variables: the total debt and the long term debt. The independent variables that we use are the tangibility of assets, the profitability, the firm size, the growth opportunities and the non-debt tax shields. All independent variables exhibit explanatory power and the results are robust to the use of debt with different maturities. The empirical results show that there is no leading theory in explaining managers’ decisions about how to finance firms. Additionally, the sample was divided into pre-crisis (2007-2008) and crisis (2009-2013) periods, the results show a substantial change of the influence of the tangibility of assets, as a result of the financial crisis.
    Keywords: capital structure, trade-off theory, pecking order theory, market timing theory, Euronext Paris
    JEL: C33 G32
    Date: 2015–12
  9. By: Luc Marco (CEPN - Centre d'Economie de l'Université Paris Nord - Université Paris 13 - Université Sorbonne Paris Cité (USPC) - CNRS - Centre National de la Recherche Scientifique); Robert Noumen (CEPN - Centre d'Economie de l'Université Paris Nord - Université Paris 13 - Université Sorbonne Paris Cité (USPC) - CNRS - Centre National de la Recherche Scientifique)
    Abstract: The history of the small business schools in Province in the nineteenth century can be made through the works of his professors. The link between arithmetic and accounting is essential to understand the education at the average level for pupils having between 12 and 16 years. The rediscovery of a mathematician doubled by an accountant, Lazare Moulin-Collin, allows to understand the formation of the teachers and the experts in these domains. From new archival sources we rediscover the biography and the contents of his very interesting works.
    Abstract: L'histoire des petites écoles de commerce en Province au dix-neuvième siècle peut être faite au travers des ouvrages de ses professeurs. Le lien entre arithmétique et comptabilité est essentiel pour comprendre l'enseignement au niveau moyen pour des élèves ayant entre 12 et 16 ans. La redécouverte d'un mathématicien doublé d'un comptable, Lazare Moulin-Collin, permet de comprendre la formation des enseignants et des experts dans ces domaines. A partir de sources archivistiques nouvelles nous redécouvrons la biographie et le contenu de ses ouvrages très intéressants.
    Keywords: Arithmetic, accounting,Arithmétique, comptabilité
    Date: 2015–11–24
  10. By: João Amador; Sónia Cabral
    Abstract: Global Value Chains (GVCs) became the paradigm for the production of most goods and services around the world. Therefore, linkages among countries can no longer be adequately assessed through standard bilateral gross trade flows and new methods of analysis are needed. In this paper, we apply visualisation tools and measures of network analysis on value-added trade flows in order to understand the nature and dynamics of GVCs. The paper uses data on the bilateral foreign value added in exports from the World Input-Output Database (WIOD) for the period 1995-2011 and, in each period, the GVC is represented as a directed network of nodes (countries) and edges (value added flows). The analysis is extended beyond total trade flows with a view to discussing the distinct roles of goods and services in GVCs. Moreover, the differences between Germany, the US, China and Russia as major suppliers of value added in GVCs are also examined.
    JEL: C67 D85 F14 F15
    Date: 2015

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