nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2017‒04‒30
ten papers chosen by
Alexander Harin
Modern University for the Humanities

  1. Intangible Assets and Firms' Liquidity Holdings: Evidence from Japan By HOSONO Kaoru; MIYAKAWA Daisuke; TAKIZAWA Miho
  2. The Capital Gains Tax: A Curse but Also a Blessing for Venture Capital Investment By Bock, Carolin; Watzinger, Martin
  3. Accounting, culture, and the state By Ingrid Jeacle; Peter Miller
  4. Is Value added Tax Progressive? Evidence from Egypt using a CGE Model By Abeer Elshennawy
  5. Jamaica; Technical Assistance Report-Cartac Report on the Sector Accounts and Balance Sheets Mission By International Monetary Fund.
  6. The limits of guilt By Loukas Balafoutas; Simon Czermak; Marc Eulerich; Helena Fornwagner
  8. Recommandations sur la prise en compte des actifs immatériels dans l'évaluation de la performance des entreprises et des organisations By Jean de Dieu Kagambega; Melchior Salgado
  9. Vertical Foreign Direct Investment: Make, Sell and (Not) Buy By Chrysovalantou Milliou; Joel Sandonís Díez
  10. Tax Avoidance by Capital Reduction: Evidence from corporate tax reform in Japan By HOSONO Kaoru; HOTEI Masaki; MIYAKAWA Daisuke

  1. By: HOSONO Kaoru; MIYAKAWA Daisuke; TAKIZAWA Miho
    Abstract: It has been an important open question why firms hold seemingly "excess" liquidity (e.g., cash). Using Japanese firm-level large panel data accounting for 40,000 firms over the period 2000-2013, first, we find a positive correlation between firms' liquidity holding as measured by the ratio of liquidity assets to total assets and the ratio of intangible to tangible assets held by the firms. This result is consistent with the empirical implication of our theoretical model based on collateral constraints for borrowing, and suggests that the increasing importance of nonpledgeable intangible assets in firms' production process partly explains firms' liquidity holding. Second, we also find that such positive correlation is stronger for the firms in industries associated with higher complementarity between tangible and intangible assets. This result suggests that the firms' liquidity holding reflects the technological heterogeneity among industries.
    Date: 2017–03
  2. By: Bock, Carolin (TU Darmstadt); Watzinger, Martin (University of Munich)
    Abstract: Our study analyzes the effect of the capital gains tax on the individual investment decisions of venture capitalists. By doing so, we are able to study the decisions for a sample of 76,852 funding rounds in 32 countries from 2000 to 2012. Our results support the predictions of the theoretical model that higher capital gains tax rates are associated with fewer start-ups financed and a lower probability of receiving follow-up funding. However, the results concerning the effect on the probability of success of start-ups show that a higher tax burden is associated with a higher probability of eventual start-up success.
    Keywords: Venture Capital; Capital Gains Tax; Selection Effect; Follow-up Funding; Innovation;
    JEL: G24 H25 H32
    Date: 2017–04–26
  3. By: Ingrid Jeacle; Peter Miller
    JEL: M40
    Date: 2016–06
  4. By: Abeer Elshennawy
    Abstract: The objective is examine the effect of value added tax in Egypt on income distribution and inflation CGE model Contrary to the experience of many countries, the value added tax was found to be marginally progressive
    Keywords: Egypt, General equilibrium modeling, Macroeconometric modeling
    Date: 2016–07–04
  5. By: International Monetary Fund.
    Abstract: A technical assistance mission from the IMF’s Statistics Department visited the Bank of Jamaica (BOJ), Kingston, Jamaica during November 28–December 9, 2016. The purpose of the mission was to follow up on the flow of funds (FOF) statistics mission of August 2015. The FOF project covers both transactions and balance sheet data. The mission was funded by the Caribbean Regional Technical Assistance Centre (CARTAC).
  6. By: Loukas Balafoutas; Simon Czermak; Marc Eulerich; Helena Fornwagner
    Abstract: This study examines experimentally how dishonest behavior in the form of misreporting others' performance depends on the nature of provided incentives. We conduct a 'lab in the field' experiment with internal auditors during two large conferences in Germany and evaluate their performance and objectivity, measured as the extent to which they truthfully report the performance of other participants a real-effort task. It has been suggested in the literature that incentive-pay compensation for auditors has the potential to lead to dishonest behavior on their part, for instance when their payoff depends on the performance of the unit that they are auditing. We vary incentives in the experiment from individual (piece rate) to competitive (tournament against another auditor) and collective (based on performance within a team). In line with our hypotheses, we find that incentive-based compensation increases dishonest behavior among internal auditors: competitive incentives lead to under-reporting of other participants' performance, while collective incentives lead to over-reporting of performance.
    Keywords: dishonesty, incentives, sabotage, internal audit, experiment
    JEL: C93 M42 M52
    Date: 2017–04
  7. By: Baker, Colleen (Independent Consultant); Cumming, Christine M. (Federal Reserve bank of New York (retired)); Jagtiani, Julapa (Federal Reserve Bank of Philadelphia)
    Abstract: This paper discusses the new financial regulations in the post–financial crisis period, focusing on capital and liquidity regulations. Basel III and the capital stress tests introduced new requirements and new definitions while retaining the structure of the pre-2010 requirements. The total number of requirements increased, making it difficult to determine which constraints are binding. We find that the new common equity tier 1 (CET1) and Level 1 high-quality liquid assets (HQLAs) are the binding constraints at large U.S. banks, especially for banks that are active in capital markets activities. Banks have been holding more CET1 and a larger share of Level 1 HQLAs since the financial crisis of 2007 to 2009. We also find that the market pricing of bank debt appears to have responded to changes in liquidity measures, especially at large capital markets banks. The Basel III regulatory capital ratios appear to have little direct influence on spreads.
    Keywords: bank capital regulations; bank liquidity; CET1; high-quality liquid assets (HQLAs); Basel III; Dodd–Frank Act; financial stability
    JEL: G12 G18 G21 G28
    Date: 2017–04–24
  8. By: Jean de Dieu Kagambega (SAF- Laboratoire de Sciences Actuarielle et Financière ISFA - SAF - Laboratoire de Sciences Actuarielle et Financière - UCBL - Université Claude Bernard Lyon 1); Melchior Salgado (SAF- Laboratoire de Sciences Actuarielle et Financière ISFA - SAF - Laboratoire de Sciences Actuarielle et Financière - UCBL - Université Claude Bernard Lyon 1 - ISEOR - Institut de Socio-économie des Entreprises et des ORganisations - Institut de socio-économie des entreprises et des organisations - Centre de Recherche Magellan - Université Jean Moulin - Lyon III - Institut d'Administration des Entreprises (IAE) - Lyon)
    Abstract: The purpose of this paper is to analyze the contribution of intangible capital in performance design of market and non-market enterprises. The paper is based on a literature review of the subject and a sensitivity analysis of intangible assets evaluation model, based on a cash flow model type DCF (Discounted Cash Flow) and enriched with qualitative data collected from CAC 40 companies and mutual health. The inclusion of intangible assets in achieving performance remains a challenging exercise to develop given the nature and specificity of the structure to evaluate. Analysing the sensitivity of the evaluation model to fluctuations in intangible assets remains more difficult due to the strong link with the specificity of the model used and the assumptions on the independence of input factors. However, with some rearrangements, we can highlight the most likely intangible assets that can improve the performance of companies and mutual health.
    Abstract: L'objet de cette présentation est d'analyser la contribution du capital immatériel dans la réalisation de la performance des entreprises marchandes et non marchandes. Cet exercice s'appuie sur une revue de la littérature existante sur le sujet ainsi qu'une analyse de la sensibilité d'un modèle d'évaluation des actifs immatériels, basé sur un modèle de cash flow de type DCF (Discounted Cash Flow) et enrichi de données qualitatives, collectées auprès d'entreprises du CAC 40 et de mutuelles de santé. La prise en compte des actifs immatériels dans la réalisation de la performance reste un exercice difficile à mettre en place compte tenu de la nature et à la spécificité de la structure à évaluer. Et analyser la sensibilité du modèle d'évaluation à la fluctuation des actifs immatériels demeure encore plus complexe car fortement lié à la spécificité du modèle utilisé ainsi qu'aux hypothèses sur l'indépendance des facteurs d'entrée. Toutefois, grâce à certains réaménagements, nous pouvons mettre en évidence les actifs immatériels les plus à même de porter la performance des entreprises et des mutuelles de santé.
    Keywords: Analyse de sensibilité,Actifs immatériels, Performance des entreprises, Performance des mutuelles, modèle de type DCF
    Date: 2015–12–15
  9. By: Chrysovalantou Milliou (Department of International and European Economic Studies); Joel Sandonís Díez (Universidad de Alicante)
    Abstract: According to conventional wisdom, multinational firms undertake vertical FDI in order to take advantage of cross-border factor cost differences and source the inputs from abroad at better terms. Recent empirical findings though document that this is not always the case. We provide theoretical support to the latter by demonstrating that when there is transfer of intangible assets between a multinational’s vertically related production plants, its parent firm can engage in vertical FDI in order to improve its cross-threat and its input sourcing terms domestically and not abroad as well as in order to exploit its intangible assets in another country. We also investigate the effects of trade liberalization and the welfare consequences of vertical FDI.
    Keywords: international trade; vertical FDI; inputs; trade liberalization; intangible assets; two-part tariffs
    JEL: L13 L22 L23
    Date: 2017–03
  10. By: HOSONO Kaoru; HOTEI Masaki; MIYAKAWA Daisuke
    Abstract: Using the pro forma standard taxation system introduced in Japan on April 1, 2004 as a natural experiment, we empirically examine how firms reacted to this exogenous institutional change, which burdened all firms holding stated capital of larger than 100 million yen with additional tax payments. Then, we determine whether such a reaction (if any) systematically resulted in firm growth. Our results are as follows. First, firms that originally held capital above the threshold became more likely to reduce their capital to the threshold level, or below, after the announcement of the new tax system. Second, firms that exhibit losses, hold smaller assets, have lower liquidity, and/or would benefit more from a tax point of view by reducing their capital were more likely to do so. Third, firms that reduced their capital showed a higher exit rate and ex-post lower growth in size, as measured by total and tangible assets, number of employees, and sales. Quantitatively, firms that reduced their capital decreased their assets, employment, and sales by 15%, 11%, and 4%, respectively, on average, within two years of the capital reduction, as compared with those that did not. Fourth, while the debt-to-total assets ratio of firms that reduced their capital did not change in comparison with firms that did not do so, the former did show a relative increase in the share of total assets made up of liquid assets. These results imply that the policy-induced capital reduction had substantial negative impacts on firm growth, and resulted in firms changing the balance of their asset holdings in favor of liquid assets.
    Date: 2017–03

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