nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2016‒10‒30
eight papers chosen by

  1. Analyzing and Reforming Tunisia's Tax System By James Alm
  2. The effect of tax enforcement on tax elasticities: evidence from charitable contributions in France By Gabrielle Fack; Camille Landais
  3. Accounting-Based Valuation Using Market Multiples: The Case Of Cyclical Companies By Emanuel Bagna; Enrico Cotta Ramusino
  4. Apple’s Tax Dispute With Europe and the Need for Reform By Gary Clyde Hufbauer; Zhiyao Lu
  5. Historical Archive of Credit in Italy By Sandra Natoli; Paolo Piselli; Ivan Triglia; Francesco Vercelli
  6. Bank capital (requirements) and credit supply: Evidence from pillar 2 decisions By Olivier De Jonghey; Hans Dewachterz; Steven Ongenax
  7. The role of bank balance sheets in monetary policy transmission. Evidence from Poland By Mariusz Kapuściński
  8. Balance sheets after the EMU : an assessment of the redenomination risk By Cédric Durand; Sébastien Villemot

  1. By: James Alm (Department of Economics, Tulane University)
    Abstract: Tunisia’s tax system has undergone significant structural reforms over the last several decades. Even so, its structure exhibits some major flaws, shortcomings that spill over to and affect the performance of the overall Tunisian economy. Further, the tax system continues to underperform in some fundamental ways, ways that also affect the rest of the economy. Finally, the structure of the Tunisian tax system has some notable shortcomings. This paper discusses these issues. It presents details of the main taxes, it analyzes several main features of this tax system, and it suggests various specific tax reforms that can be introduced both in the short term and in the longer term.
    Keywords: Tunisia, tax reform
    JEL: H20 H24 H25 H87
    Date: 2015
  2. By: Gabrielle Fack; Camille Landais
    Abstract: In the “sufficient statistics” approach, the optimal tax rate is usually expressed as a function of tax elasticities that are often endogenous to other policy instruments available to the tax authority, such as the level of information, enforcement, etc. In this paper we provide evidence that both the magnitude and the anatomy of tax elasticities are extremely sensitive to a particular policy instrument: the level of tax enforcement. We exploit a natural experiment that took place in France in 1983, when the tax administration tightened the requirements to claim charitable deductions. The reform led to a substantial drop in the amount of contributions reported to the administration, which can be credibly attributed to overreporting of charitable contributions before the reform, rather than to a real change in giving behaviors. We show that the reform was also associated with a substantial decline in the absolute value of the elasticity of reported contributions. This finding allows us to partially identify the elasticity of overreporting contributions, which is shown to be large and inferior to − 2 in the lax enforcement regime. We further show using bunching of taxpayers at kink-points of the tax schedule that the elasticity of taxable income also experienced a significant decline after the reform. Our results suggest that failure to account for the effect of tax enforcement on both the magnitude and the anatomy of the elasticity of the tax base with respect to the net of tax rate can lead to misleading policy conclusions, both for the global optimal tax rate (when all policy instruments are optimized) and the local optimal tax rate (conditional on all other
    Keywords: tax evasion; tax enforcement; charitable giving; taxable income; elasticity
    JEL: E6
    Date: 2016–01
  3. By: Emanuel Bagna (Department of Economics and Management, University of Pavia); Enrico Cotta Ramusino (Department of Economics and Management, University of Pavia)
    Abstract: Accounting market multiples are more often used than studied. Equity analysts, investment bankers and other practitioners widely use accounting market multiples such as Price to Earnings, Enterprise Value to EBITDA to estimate the value of companies. Nevertheless, literature about multiples is not as rich as the wide use of these valuation tools would suggest. This paper, focusing on European listed companies, investigates how market multiples based on historical accounting measures can be used in the valuation of cyclical companies, a much less investigated research topic. We test the accuracy of multiples to understand whether their performance in valuing cyclical companies is better, worse or equal to the performance found in prior studies, where both cyclical and non cyclical companies are analyzed without distinguishing between them. We also attempt to verify whether the way in which multiples are calculated significantly affects the accuracy of estimation. Our aim is to develop a valuation approach consistent with valuation theory and helpful in everyday practice.
    Keywords: Valutation, Valuation Multiple, Cyclical Companies
    JEL: G32 G12 G30
    Date: 2016–10
  4. By: Gary Clyde Hufbauer (Peterson Institute for International Economics); Zhiyao Lu (Peterson Institute for International Economics)
    Abstract: On August 30, 2016, European Competition Commissioner Margrethe Vestager demanded that Ireland reclaim €13 billion ($14.5 billion) from Apple Inc. to redress improper “state aids” conferred on the company through Irish tax rulings in 1991 and 2007. The European Commission’s demands triggered a huge uproar—from Ireland, Apple, other multinational corporations, and the US Treasury Department. According to the Commission, Apple paid an effective corporate tax rate of less than 1 percent between 2003 and 2014, through a sweetheart tax deal with Irish tax authorities. The Commission alleged this to be a breach of EU state aid rules and instructed Ireland to claim unpaid taxes from Apple. Both Apple and Ireland announced they would appeal. Apple denied the extremely low effective tax rate claimed by the Commission and insisted that it had paid all taxes in accordance with existing treaties, laws, regulations, and rulings. Ireland appealed in light of its position as a favored site for multinational corporations doing business in Europe. The US Treasury Department, aligning with Apple and Ireland, criticized the Commission’s new approach as applied in the Apple case, as well as the retroactive component of the decision and its detrimental impact on the ability of member states to honor bilateral tax treaties.
    Date: 2016–10
  5. By: Sandra Natoli (Bank of Italy); Paolo Piselli (Bank of Italy); Ivan Triglia (Bank of Italy); Francesco Vercelli (Bank of Italy)
    Abstract: This paper presents the Archivio Storico del Credito in Italia (ASCI), a comprehensive database of balance sheet data for nearly 2,600 Italian banks on an annual basis for the period 1890-1973. The work draws on earlier work carried out by the Bank of Italy for the period 1890-1936 (published in 1996) and incorporates information collected by the Bank of Italy as part of its banking supervision activity from 1936 onwards. ASCI is suitable for analyzing a variety of credit phenomena, given the high representativeness of the banking system and the large amount of balance sheet data available. Based on this new dataset, we provide a sketch of the evolution of the Italian banking system between 1890 and 1973, exploring the composition of the balance sheets across bank categories, the regional distribution of banks and the degree of concentration.
    Keywords: bank statements, credit statistics, banking history
    JEL: C81 G21 N23 N24
    Date: 2016–01
  6. By: Olivier De Jonghey (Corresponding author, CentER, European Banking Center, Tilburg University); Hans Dewachterz (National Bank of Belgium, Research Department, KULeuven); Steven Ongenax (University of Zurich, SFI, CEPR)
    Abstract: We analyze how time-varying bank-speci_c capital requirements a_ect banks' balance sheet adjustments as well as bank lending to the non-_nancial corporate sector. To do so, we relate Pillar 2 capital requirements to bank balance sheet data, a fully documented corporate credit register and _rm balance sheet data. Our analysis consists of three components. First, we examine how time-varying bank-speci_c capital requirements a_ect banks' balance sheet composition. Subsequently, we investigate how capital requirements a_ect the supply of bank credit to the corporate sector, both on the intensive and extensive margin, as well as for di_erent types of credit. Finally, we document how bank characteristics, _rm characteristics and the stance of monetary policy impact the relationship between bank capital requirements and credit supply.
    Keywords: Capital requirements, credit supply, credit register, bank, regulation
    JEL: G01 G21 G28 F02 L5
    Date: 2016–10
  7. By: Mariusz Kapuściński
    Abstract: This study investigates whether the effects of monetary policy are amplified through its impact on bank balance sheet strength. Or, in other words, it tests whether the bank lending channel of the monetary transmission mechanism (as reformulated by Disyatat, 2011) works. To this end, panel vector autoregressions with high frequency identification and univariate panel regressions are applied to data for Poland. Counterfactual exercises show that the analysed channel accounts for about 23% of a decrease in lending following a monetary policy impulse. This is another piece of evidence showing that the financial accelerator works in both non-financial and financial sector. In some cases it can make the interplay between monetary and macroprudential policy non-trivial.
    Keywords: monetary transmission mechanism, bank capital, panel vector autoregressions, high frequency identification
    JEL: E52 E51 C33 C23 E43
    Date: 2016
  8. By: Cédric Durand (Université Paris 13); Sébastien Villemot (Observatoire français des conjonctures économiques)
    Abstract: The probability of a partial or complete break-up of the euro has risen over the last years. Such an event could create a balance sheet problem for economic agents, since the redenomination process could introduce significant currency mismatches between the asset and liability sides. We propose a new assessment of this redenomination risk, by country and by main institutional sector, for two scenarios: a single country exit and a complete break-up. Our main conclusion is that, even though the problem has to be taken seriously, its order of magnitude should not be exaggerated. Only a few sectors are at significant risk: public debts of Greece and Portugal, financial sectors of Greece, Ireland and Luxembourg. In particular, the consequences for the nonfinancial private sector should be manageable. We provide policy recommendations aiming at limiting the risk ex ante, and mitigating the consequences ex post
    Keywords: EMU; Balance Sheets; Risk; public debt
    Date: 2016–10

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