nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2017‒02‒05
seven papers chosen by
Alexander Harin
Modern University for the Humanities

  1. Who is audited? Experimental study on rule-based tax auditing schemes By Yoshio Kamijo; Takehito Masuda; Hiroshi Uemura
  2. Les normes IAS/IFRS et le défi du traitement comptable du Goodwill By Zine-Eddine, Yasmine
  3. The use of SME tax incentives in the European Union By Bergner, Sören Martin; Bräutigam, Rainer; Evers, Maria Theresia; Spengel, Christoph
  4. A COMPARISON ANALYSIS OF FARM FINANCIAL POSITIONS BETWEEN FARMERS WHO USE THE GUIDELINES AND THOSE WHO DO NOT By Kamer, Mary Catherine; Gumirakiza, Dominique
  5. The implications of book-tax differences: A meta-analysis By Evers, Maria Theresia; Meier, Ina; Nicolay, Katharina
  6. Export Tax Rebates and Resource Misallocation: Evidence from a Large Developing Countr By Weinberger, Ariel; Xuefeng, Qian; Yasar, Mahmut
  7. Will German banks earn their cost of capital? By Dombret, Andreas; Gündüz, Yalin; Rocholl, Jörg

  1. By: Yoshio Kamijo (School of Economics and Management, Kochi University of Technology); Takehito Masuda (Institute of Economic Research, Kyoto University); Hiroshi Uemura (School of Economics and Management, Kochi University of Technology)
    Abstract: In this study, we employ a game-theoretic framework to formulate and analyze a number of tax audit schemes. We then test the theoretical predictions in a laboratory experiment. We compare audit schemes based on three audit rules: the random rule, cut-off rule, and lowest income reporter audited rule. While the cut-off rule is known to be optimal in theory, it has not thus far been examined in a controlled laboratory experimental setting. Contrary to the theory, the lowest income reporter audited rule yielded higher compliance behavior than the optimal cut-off rule in the experiment, even after controlling for social norms regarding tax payment perceived by the subjects. This empirical finding is practically important because the tax authorities in most countries assign higher priority to enhancing tax compliance.
    Keywords: audit scheme; tax evasion; laboratory experiment; cut-off rule; lowest income reporter audited rule
    JEL: C91 C92 D81 H26
    Date: 2017–01
    URL: http://d.repec.org/n?u=RePEc:kyo:wpaper:958&r=acc
  2. By: Zine-Eddine, Yasmine
    Abstract: This paper fits in the recent developments regarding the goodwill accounting regulations. The main aim here is to analyze the economic implications related to accounting practices of said goodwill and specifically the potential impact that was driven on the consolidated accounts of listed companies by their transition toward the International Financial Reporting Standards (IFRS) since January the 1st, 2005. In this framework, this paper lays emphasis on the new international accounting standard IFRS 3, which had brought new conceptual and accounting requirements in relation to the treatment of goodwill. This new reference frame aims to replace the traditional solution, which stipulates a goodwill amortization following a plan for a relatively long period. The latter is replaced by an annual evaluation that includes the goodwill impairment through a series of tests. The downstream finding is that the impact of the reform of the accounting treatment in the case of business combinations and the resulting goodwill will depend significantly on the application of IFRS 3.
    Keywords: Goodwill, IFRS 3, IAS 36, IAS 38, business combination, intangible assets, transition, impairment test.
    JEL: G32 M41
    Date: 2017–01–25
    URL: http://d.repec.org/n?u=RePEc:pra:mprapa:76403&r=acc
  3. By: Bergner, Sören Martin; Bräutigam, Rainer; Evers, Maria Theresia; Spengel, Christoph
    Abstract: This paper discusses the impact and the appropriateness of tax incentives for small and medium-sized enterprises (SMEs) in the European Union. First, we provide a survey of implemented tax incentives specifically targeted at SMEs in the 28 EU Member States. Building hereon, we measure the impact of these regimes on the effective tax burdens of targeted companies. We find that SME tax incentives are a commonly used measure among European policy makers. The vast majority of regimes, however, only marginally reduce the tax liability of SMEs. If major reliefs are available, they mostly stem from special tax rates whereas tax credits and special allowance play a minor role. In the second main part of the analysis, we examine the arguments potentially justifying the usage of SME tax incentives. As a main result, small firms per se do not create more jobs and innovations nor do they face insurmountable financing constraints. The existence of market failures commonly associated with SMEs - and possibly warranting the use of SME tax incentives - can therefore not be confirmed. Instead, disproportionate tax compliance costs for small entities constitute the most compelling argument for a special tax treatment. These compliance costs can most appropriately be addressed by administrative reliefs. Special tax rates, tax credits and allowances, in contrast, are not only inefficient but also ineffective in this regard. Instead of improving the neutrality of the overall tax system, the latter are likely to add further distortions and unnecessary complexity. Altogether, the focus of policy-makers should thus shift from providing discriminatory incentives to the design of a generally neutral and simple tax system, which would benefit small as well as large enterprises.
    Keywords: SME,Tax Policy,European Union
    JEL: H24 H25
    Date: 2017
    URL: http://d.repec.org/n?u=RePEc:zbw:zewdip:17006&r=acc
  4. By: Kamer, Mary Catherine; Gumirakiza, Dominique
    Abstract: Farm Financial Standards Council (FFSC) developed accounting procedures that are specific to agricultural producers; commonly referred to as the “Guidelines". This paper determines the extent to which agriculture producers in Kentucky are using the Guidelines and analyzes the effect the use has on farm profitability. Data were collected through a mailed survey sent to 650 small and medium farms during early summer 2016. Results indicate that the majority of producers have either not heard of the Guidelines, or that they may have heard of them but are unsure of how to use them. We also found that those who keep records of financial activities following the Guidelines have higher profits and are confident in making financial decisions to expend their farm. The fact that following the Guidelines is associated with greater profitability is a motivating factor to those who did not adopt them yet. Results suggest that extension specialists need to improve their efforts towards providing technical assistance to the producers. Likewise, offering agricultural accounting classes that teach the use of the Guidelines among current and future agriculture producers improve farm profitability and economic sustainability in future. This study is useful for future studies regarding the use of the Guidelines.
    Keywords: Guidelines, Agricultural finance, Education, Agribusiness, Agricultural Finance,
    Date: 2017
    URL: http://d.repec.org/n?u=RePEc:ags:saea17:252731&r=acc
  5. By: Evers, Maria Theresia; Meier, Ina; Nicolay, Katharina
    Abstract: Over the last decade, a large body of tax accounting literature on the association between book-tax conformity (BTC)/book-tax differences (BTD) and firms' opportunistic reporting behavior has emerged. Yet, existing empirical evidence on the questions whether increased book-tax conformity actually reduces Earnings Management (EM) and/or Tax Sheltering (TS) and whether book-tax differences are really indicative of such opportunistic reporting behavior is not yet clear. We therefore conduct a meta-analysis aimed at identifying the sources of heterogeneity in primary studies and at providing a consensus estimate with respect to the sign and the statistical significance level for the examined association. Our qualitative literature review reveals that major sources of heterogeneity in the study design include differences in the proxies for EM and TS and in the measures used to determine BTD and BTC. Our meta-regression results show that BTD are indeed indicative of opportunistic reporting behavior, and even more so of EM. These results are, however, weaker for studies that determine BTD only roughly as the difference between book and estimated taxable income instead of using more specific BTD proxies. Moreover, examining actual BTD computed from tax returns instead of only approximating these from financial statements strongly increases the effects. Hence, efforts taken to accurately determine BTD seem to be worth wile when it comes to the explanatory power for opportunistic reporting. Furthermore, our results suggest a negative association between book-tax conformity and EM/TS, which we interpret as an indicator for higher conformity indeed being effective in reducing aggressive reporting.
    Keywords: book-tax conformity,book-tax differences,tax sheltering,earnings management,meta-analysis
    JEL: H20 H26 K34 M41
    Date: 2017
    URL: http://d.repec.org/n?u=RePEc:zbw:zewdip:17003&r=acc
  6. By: Weinberger, Ariel (University of Oklahoma); Xuefeng, Qian (Zhongnan University of Economics and Law); Yasar, Mahmut (UT-Arlington and Emory University)
    Abstract: The export tax rebate (ETR) policy is one of the most frequently used policy instruments by Chinese policy makers. This paper therefore provides a vital analysis of its allocation effects. To motivate our empirical analysis for the allocation effects of the ETR policy, we first add a tax rebate to the Melitz and Ottaviano (2008) model and examine the impact of this policy on firms' markup size and resource allocation between eligible and non-eligible firms for the rebates. We use customs transactions, tax administration, and firm-level data to measure the effect of variation in export tax rebates, taking advantage of the large policy change in 2004. A difference-indifference approach allows us to compare the production and pricing decisions of eligible versus non-eligible firms and the distributional implications. We find that an increase in tax rebates shifts production to eligible firms and that tax rebates increase allocative efficiency.
    Date: 2017–01–01
    URL: http://d.repec.org/n?u=RePEc:fip:feddgw:302&r=acc
  7. By: Dombret, Andreas; Gündüz, Yalin; Rocholl, Jörg
    Abstract: In recent years, the German banking sector has overcome major challenges such as the global financial crisis and the European debt crisis. This paper analyses a recent development as a particular determinant of the future outlook for the German banking sector. Interest rates are at historically low levels and may remain at these levels for a considerable period of time. Such levels pose a specific challenge to banks which are heavily dependent on interest income, as is the case for most German banks. We consider different interest rate scenarios and analyse the extent to which they cause a further narrowing of the interest rate margin. Our results indicate that a projected decline in this margin will result in no more than 20% of German banks earning a cost of capital of 8% by the end of this decade. This decline is somewhat alleviated by the fact that German banks can apply a special feature of German accounting standards by using hidden and open reserves.
    Keywords: German banking sector,low interest period,profitability,hidden and open reserves
    JEL: G21 G28
    Date: 2017
    URL: http://d.repec.org/n?u=RePEc:zbw:bubdps:012017&r=acc

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