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on Accounting and Auditing |
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Issue of 2016‒10‒02
eleven papers chosen by |
| By: | De Simone, Lisa (Stanford University); Mills, Lillian F. (University of TX); Stomberg, Bridget (University of GA) |
| Abstract: | We develop and validate a firm-level measure of cross-jurisdictional income shifting and then test whether "income mobile" firms incur more negative IRS audit outcomes. Results suggest income mobile firms are no more likely to be audited than other multinational entities (MNEs), but they are more likely to receive a proposed deficiency from the IRS and to have a greater proportion of their originally claimed tax benefits challenged upon audit. At the conclusion of the exam, appeals and counsel progress, income mobile firms lose a greater portion of their claimed tax savings. However, because income mobile firms are better able to exploit opportunities to minimize U.S. taxes, their total U.S. taxes paid as a percentage of pre-tax income remains lower than other MNEs despite their more negative audit outcomes. Our contribution is using confidential IRS tax return data to inform the debate over U.S. tax outcomes for income mobile firms. |
| Date: | 2016–06 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:stabus:3447&r=acc |
| By: | Gipper,Brandon (Stanford University) |
| Abstract: | We provide the first large-sample evidence of banks playing an important role in facilitating tax planning by client firms. Capturing bank-client relationships using lending contracts and measuring borrower tax avoidance with the three-year cash effective tax rate and the unrecognized tax benefit balance, we document the extent to which banks are associated with tax avoidance by corporate borrowers. In multivariate analyses, we find that the average tax avoidance of a bank's other borrowers is an economically important determinant of a client firm's own tax avoidance. In additional tests, we find evidence consistent with this result being driven in part by banks acting as tax planning intermediaries. Finally, we find that clients experience meaningful increases in tax avoidance when they begin a new relationship with a bank whose existing borrowers are substantial tax avoiders. Overall, our results suggest that banks, in addition to being financial intermediaries, also act as tax planning intermediaries in facilitating corporate tax planning. |
| Date: | 2016–06 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:stabus:3443&r=acc |
| By: | Mini P. Thomas (Assistant Professor, Dept. of Economics and Finance, Birla Institute of Technology and Science (BITS) Pilani - Hyderabad Campus, India) |
| Abstract: | Economic Growth and External Stabilisation (defined in terms of Current Account Balance as a percentage of GDP) is a top priority for policy-makers, while laying out the macroeconomic framework for Indian economy. Government of India had targeted for an average GDP growth rate of 9 percent and a Current Account Deficit (CAD) below 2.5 percent of GDP during the five-year period from 2012-2017. However, the actual CAD of Indian economy widened to 4.2% of GDP in 2011-12, and further reached a historic high CAD of 4.7 percent of GDP in 2012-13. Given such a scenario, this paper aims to estimate the impact of services trade on India’s Economic Growth and Current Account Balance, during the post-reform period from 1990-91 to 2011-12. Facilitated by economic globalisation, domestic liberalization, and technological advances which resulted in increasing international fragmentation of the production process, India’s services trade began growing rapidly post 1991. With the help of Thirlwall’s Balance of Payments Constrained Growth Model and ARDL approach to cointegration, this study estimates and establishes the crucial role of services trade in achieving the policy objectives of economic growth and external stabilisation simultaneously for Indian economy. This study also examines the impact of services exports on India’s economic growth, by comparing the latest officially published input-output table of India for 2007-08, with that of 1993-94. Among the major services in India’s export basket, construction, transport and business services are found to exhibit strongest backward linkages, and hence can act as engines of export-led growth. Role of services imports in India’s export-led growth and the import content going into production of India’s services exports is analysed using the TIVA database for 1995 and 2008, which have implications for India’s external stabilisation. Foreign value added content in India’s services exports is found to be highest in case of business services, transport services and telecommunications. |
| Keywords: | Services Trade, Current Account Deficit, Economic Growth, Backward Linkages |
| JEL: | F14 F32 F43 C67 |
| Date: | 2016–09 |
| URL: | http://d.repec.org/n?u=RePEc:msm:wpaper:2016/11&r=acc |
| By: | Masanori Orihara (Policy Research Institute, Ministry of Finance,Japan) |
| Abstract: | Economic theory dating back to Domar and Musgrave (1944, Quarterly Journal of Economics 58, 388-422) suggests that the tax treatment of gains and losses can affect incentives for firms to undertake high-risk investments. We take advantage of a 2002 tax reform in Japan as a natural experiment to test the theory. This tax reform introduced a consolidated taxation system (CTS). The CTS allows business groups to offset gains with losses across firms in their group. Thus, the CTS can mitigate disincentives to high-risk investments. Using information on R&D as the investment risk measures, we estimate dynamic investment models with unique panel data of Japanese firms between 1994 and 2012. For identification, we take an instrumental variable approach in a difference-in-differences framework or in a triple-differences framework. We provide evidence that the CTS increases R&D, in agreement with Domar and Musgrave (1944). We also find evidence that the CTS enhances risk-sharing across group members and across asset types. These findings suggest that mitigating tax asymmetries is an effective policy to help encourage both risk-taking and risk-sharing. |
| Keywords: | tax asymmetries, R&D, business group, risk-taking, risk-sharing, natural experiment |
| JEL: | G31 G38 H25 H32 |
| URL: | http://d.repec.org/n?u=RePEc:mof:wpaper:ron273&r=acc |
| By: | Jaelani, Aan |
| Abstract: | The various sources of zakat accounting are actually going to provide an answer to the question of whether the accounting capable of acting stints zakat management. Zakat accounting will provide information or data of a general nature modified technically-practical reorganized to be able to calculate the zakat that in fact contain a special purpose, such as the purification of wealth. The business organization is generally oriented to profit by using the entity (entity theory), which means that the company is a separate entity from its owners. While zakah accounting as a part of shari'a accounting affirms that a company or business organization is united with its owner, so that he has an obligation to pay zakat. Consequently, the business organization to change the orientation, from profit and stockholder-oriented to zakah-oriented, conservation of nature-oriented, and stakeholders-oriented. |
| Keywords: | zakah, shari’a, accounting, business organization, profit |
| JEL: | H25 H27 I38 M2 M41 M48 N30 Z12 |
| Date: | 2016–09–03 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:74003&r=acc |
| By: | Weins, Sebastian; Alm, Bastian; Wang, Tawei |
| Abstract: | The concept of Continuous Auditing has been around for more than three decades. The ongoing discussion on the benefits and models on adoption has made Continuous Auditing become a more critical issue. Although a lot of progress has been made in previous years, we argue that the entire potential of Continuous Auditing still remains unrevealed. This paper provides a new conceptual framework on how to bring Continuous Auditing to the next level. It goes beyond the existing technical concepts and solutions for implementation by developing a more holistic Integrated Continuous Auditing Approach. We illustrate how Continuous Auditing can be adopted in order to increase audit efficiency by enabling a new collaborative design between internal and external auditors as well as by readjusting the roles of different auditing parties. |
| Keywords: | continuous auditing,internal audit,audit collaboration |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:esprep:146401&r=acc |
| By: | Etienne Redor (Audencia Recherche - Audencia Business School) |
| Abstract: | Although the Audit Committee is a key component of corporate governance, very few studies have analyzed the market reaction to the departure of an Audit Committee Director. In this paper, we study the market reaction to 90 Audit Committee Director departures between 2004 and 2014. We find no significant market reaction at either the time of a non co-opted directors' departure or at the time of a financial expert directors' departure. Conversely, we show a significant positive market reaction at the announcement of a female Audit Committee member's departure, but no significant market reaction to the announcement of a male Audit Committee member's departure. |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-01343678&r=acc |
| By: | Rajan, Madhav V. (Stanford University); Ederhof, Merle (?); Nagar, Venkatesh (?) |
| Abstract: | Standard managerial accounting textbooks (see, e.g., Horngren et al., 2015, chapter 9; Kaplan and Atkinson, 1998, chapters 1 and 9; Cooper and Kaplan, 1991, chapter 3), case studies (see, e.g., 'Bridgeton Industries'; 'Micro Devices Division'; 'Schulze Waxed Containers'; 'Hewlett Packard: Queensferry Telecommunications Division'; 'Anagene, Inc.'), and qualitative manuscripts (see, e.g., Cooper and Kaplan, 1988, 1992; Kaplan, 1994) advocate for the cost of unused capacity to be excluded when calculating product costs. This instruction is also shared by US financial accounting standards (SFAS 151). The arguments for excluding unused capacity costs include a) avoidance of the so-called 'death spiral', and b) a reduction in the fluctuations of product costs and profit margins. While these arguments are widely accepted, they have not been empirically investigated in a systematic manner. This study fills this gap in the literature. |
| Date: | 2016–04 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:stabus:3416&r=acc |
| By: | Priya Punatar; Youngsuk Yook |
| Abstract: | This note explains recent changes in the treatment of direct investment in the Federal Reserve Board's Financial Accounts of the United States (formerly known as the Flow of Funds Accounts). |
| Date: | 2014–10–31 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfn:2014-10-31-2&r=acc |
| By: | Ammar Sammout (Faculty of Economics and management, University of Sfax); Nejia Nekâa (Faculty of Economics and management, University of Sfax) |
| Abstract: | The question of performance is located in the heart of the issue of the governance of the banks. The purpose of this issue is whether the governance mechanisms significantly explain the performance level. This paper aims to study the impact of the presence of an audit committee on the stock market performance of Tunisian banks. |
| Keywords: | Audit Committee,governance,performance,stocks market,banks,Tunisia |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-01347656&r=acc |
| By: | Ayelen Banegas; Manjola Tase |
| Abstract: | We study developments in reserve balances and the federal funds market in the context of two banking regulatory changes: the widening of the Federal Deposit Insurance Corporation (FDIC) assessment base and the introduction of the Basel III leverage ratio. Using a novel data set that includes FDIC fees and balance sheet data for depository institutions, we find that, as most foreign banks were not subject to the FDIC fee, they absorbed increasing amounts of reserve balances. Furthermore, foreign banks experienced positive and improving conditions for arbitraging between borrowing reserve balances in the federal funds market and earning interest on excess reserves by holding those reserves at the Federal Reserve Banks, contributing to an increase in federal funds borrowing by foreign banks relative to domestic banks. However, the implementation of the Basel III leverage ratio was associated with temporary declines in foreign bank federal funds borrowing at reporting dates. |
| Keywords: | Basel III ratios ; FDIC fees ; IOER arbitrage ; Reserve balances ; Federal funds market |
| JEL: | E49 E52 G28 |
| Date: | 2016–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfe:2016-79&r=acc |