nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2016‒07‒16
nine papers chosen by
Alexander Harin
Modern University for the Humanities

  1. Disclosure of Corporate Tax Reports, Tax Enforcement, and Insider Trading By Jordi Caballé; Ariadna Dumitrescu
  2. Firm Employment Growth, R&D Expenditures and Exports By Marco Di Cintio, Marco Di Cintio; Sucharita Ghosh, Sucharita Ghosh; Emanuele Grassi, Emanuele Grassi
  3. 2014-2015 tax changes in EU Member States vs the Commission’s tax policy recommendations By Luigi Bernardi
  4. China's Banking Sector as the Foundation of Financial Reform By Sara Hsu
  5. Accounting for Business Cycles By Brinca, Pedro; Chari, V. V.; Kehoe, Patrick J.; McGrattan, Ellen R.
  6. Working Paper 01-16 - Improving the Stability and Growth Pact by integrating a proper accounting of public investments: a new attempt By Henri Bogaert
  7. Matrice de Comptabilité Sociale de 2013 pour la R.D.Congo By Nlemfu Mukoko, Jean Blaise
  8. Fiscal Implications of Central Bank Balance Sheet Policies By Orphanides, Athanasios
  9. Prosperity, Sustainability and the Measurement of Wealth By Kevin J. Mumford

  1. By: Jordi Caballé; Ariadna Dumitrescu
    Abstract: In this paper, we analyze the effects of disclosing corporate tax reports on the performance of financial markets and the use of asset prices by the tax enforcement agency in order to infer the true corporate cash flows. We model the interaction between a firm and the tax auditing agency, and highlight the role played by the tax report as a public signal used by the market dealer and the role of prices as a signal used by the tax authority. We discuss the determinants of both the reporting strategy of the firm and the auditing policy of the tax authority. Our model suggests that, despite disclosure of the tax reports being beneficial for market performance (as the spreads and trading costs are smaller than under no disclosure), the tax agency might have incentives to not disclose the tax report when its objective is to maximize expected net tax collection.
    Keywords: disclosure, corporate tax, Insider Trading
    JEL: G12 G14
    Date: 2016–07
  2. By: Marco Di Cintio, Marco Di Cintio; Sucharita Ghosh, Sucharita Ghosh; Emanuele Grassi, Emanuele Grassi
    Abstract: This paper studies firms’ decisions to export and invest in R&D and their effects on employment growth and labor flows for a sample of Italian SMEs operating in the manufacturing industry. After accounting for the under-reporting of R&D in SMEs, our quantile regressions reveal that (i) R&D is associated with higher employment growth rates, higher hiring rates and lower separation rates; (ii) R&D-induced exports are negatively related to employment growth and accessions and positively related to separations; and (iii) pure exports are not a driver of employment growth and labor flows.
    Keywords: Exports, R&D, Firm Growth, Quantile Regression, Research Methods/ Statistical Methods, J63, M51, O31, F14,
    Date: 2016–07–04
  3. By: Luigi Bernardi (Università di Pavia)
    Abstract: At first glance, it would seem that in recent years the tax changes adopted by EU Member States have diverged from the European Commission’s tax policy recommendations. Member States generally appear to go no further than making minor changes to existing tax rules. The Commission, on the other hand, recommends far broader reforms designed to help tax systems meet the challenges raised by the current economic crisis. Therefore, the purpose of this paper is to monitor this situation, and to offer an overall picture of the 2014-2015 tax changes made by European Union Member States. Furthermore, we shall be discussing the EU’s 2015 tax policy recommendations to Member States. By doing so we are in a position to affirm that the said divergence appears to exist, and we offer a number of observations regarding this result.
    Keywords: Tax reforms, European Union, 2014-2015
    JEL: H20 H24 H29
  4. By: Sara Hsu
    Abstract: China is in the process of undertaking financial reform in many directions—introducing small private banks in the banking sector, promoting bond and equity finance, increasing exchange rate and capital account liberalization, enhancing financial regulation, and promoting the efficiency and scope of finance. While some foreign analysts have focused on the importance of liberalizing the exchange rate and capital account, we believe these aspects of reform take second priority to traditional banking reform, even though the ongoing process in practice is to slowly implement reforms in all areas at once.
    Keywords: China, banking system, financial system, reform, liberalization
    Date: 2016–07–01
  5. By: Brinca, Pedro (Nova School of Business and Economics); Chari, V. V. (Federal Reserve Bank of Minneapolis); Kehoe, Patrick J. (Federal Reserve Bank of Minneapolis); McGrattan, Ellen R. (Federal Reserve Bank of Minneapolis)
    Abstract: We elaborate on the business cycle accounting method proposed by Chari, Kehoe, and McGrattan (2007), clear up some misconceptions about the method, and then apply it to compare the Great Recession across OECD countries as well as to the recessions of the 1980s in these countries. We have four main findings. First, with the notable exception of the United States, Spain, and Ireland, the Great Recession was driven primarily by the efficiency wedge. Second, in the Great Recession, the labor wedge plays a dominant role only in the United States, and the investment wedge plays a dominant role in Ireland and Spain. Third, in the recessions of the 1980s the labor wedge played a dominant role only in Denmark and the United Kingdom. Finally, overall in the Great Recession the efficiency wedge played a much more important role and the investment wedge played a much less important role than they did in the recessions of the 1980s.
    Keywords: Business cycle accounting; Great Recession; 1982 recession
    JEL: E60 E61 G28 G33
    Date: 2016–06–28
  6. By: Henri Bogaert
    Abstract: Improving the functioning of the Stability and Growth Pact (SGP) is back on the agenda, especially as the decline in public investment resulting from fiscal adjustment processes implemented according to the current Pact rules is seen as a brake on future economic growth. When discussions about a Pact revision in 2005 were under way, several major authors (for instance: Blanchard and Giavazzi in CEPR February 2004) suggested reverting to a golden rule under which the deficit would exclude investment expenditure, net of amortization. The Pact was revised in 2005 but this proposal was not adopted. This paper presents a new attempt to integrate a proper accounting of investment into the Pact by modifying the formula of the MTO (Medium Term Objective for the budget balance), without losing the other dimensions of the present formula: the partial provisioning of the so-called cost of ageing and the accelerated debt reduction for highly indebted countries. In this way, the public investment programme becomes a centrepiece of the structural policy of a government and not the first instrument of a cyclical policy.
    JEL: H6
    Date: 2016–01–07
  7. By: Nlemfu Mukoko, Jean Blaise
    Abstract: This work involves the construction of the 2013 Social Accounting Matrix for the D.R.Congo (MCS-CD2013). Three main sources of data were used namely Tables of Resources and Employment (TRE), the table of Integrated Economic Accounts (TCEI) for 2013, and data from the 1-2-3 survey on employment, the informal sector and household consumption for the year 2012. Given the nature of these data, we have resorted to the bottom-up approach to the development of this SAM and methods of RAS and cross-entropy for its balancing. After these steps, the obtained SAM past internal and external consistency tests. The results reflect macroeconomic accounting balances for the respective year. Therefore, this SAM is the basis for data Reference for macroeconomic studies and modeling of the Congolese economy.
    Keywords: Matrice de Comptabilité Sociale, Tableau des Ressources et Emplois,Tableau des Comptes Economiques Intégrés
    JEL: C82 E16
    Date: 2015–09
  8. By: Orphanides, Athanasios
    Abstract: Under ordinary circumstances, the fiscal implications of central bank policies tend to be seen as relatively minor and escape close scrutiny. The global financial crisis of 2008, however, demanded an extraordinary response by central banks which brought to light the immense power of central bank balance sheet policies as well as their major fiscal implications. Once the zero lower bound on interest rates is reached, expanding a central bank's balance sheet becomes the central instrument for providing additional monetary policy accommodation. However, with interest rates near zero, the line separating fiscal and monetary policy is blurred. Furthermore, discretionary decisions associated with asset purchases and liquidity provision, as well as with lender-of-last-resort operations benefiting private entities, can have major distributional effects that are ordinarily associated with fiscal policy. In the euro area, discretionary central bank decisions can have immense distributional effects across member states. However, decisions of this nature are incompatible with the role of unelected officials in democratic societies. Drawing on the response to the crisis by the Federal Reserve and the ECB, this paper explores the tensions arising from central bank balance sheet policies and addresses pertinent questions about the governance and accountability of independent central banks in a democratic society.
    Keywords: central bank accountability; central bank governance; central bank independence; lender of last resort; loss sharing; monetary financing; Quantitative easing; rules vs discretion.
    JEL: E52 E58 E61 G01 H12
    Date: 2016–07
  9. By: Kevin J. Mumford
    Abstract: Gross domestic product (GDP) and household income measures provide invaluable metrics of economic activity in an economy, but they tell us little about the sustainability of the economic trends. National wealth accounting can be utilised to determine the size of the underlying productive base, which provides insight into the sustainability of economic activities and indicates the potential for intergenerational well-being. An empirical methodology was developed to measure wealth and then used to analyse multiple Asian countries. A common theme found across the Asian countries was the depletion of natural capital (forests, minerals and energy) and the development of human and produced capital. A strong correlation between growth in GDP per capita and wealth per capita was also found, but there are instances of GDP growth and wealth growth having different signs.
    Keywords: wealth accounting, sustainability, economic policy, intergenerational
    Date: 2016–07–01

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