nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2017‒05‒28
nine papers chosen by

  1. Decomposition techniques for financial ratios of European non-financial listed groups By Carlino, Laurent; Coppens, François; González, Javier; Ortega, Manuel; Pérez-Duarte, Sébastien; Rubbrecht, Ilse; Vennix, Saskia
  2. External Adjustment in Oil Exporters: The Role of Fiscal Policy and the Exchange Rate By Alberto Behar; Armand Fouejieu
  3. Tax Administration Reforms in the Caribbean; Challenges, Achievements, and Next Steps By Stephane Schlotterbeck
  4. Is there any Induced Demand for Tax Evasion? By Marchese, Carla; Venturini, Andrea
  5. The economic distortions of a border-adjusted corporate cash flow tax By McGee, M Kevin
  6. Effectiveness of Fiscal Incentives for R&D; Quasi-Experimental Evidence By Irem Guceri; Li Liu
  7. Changing Tax Capacity and Tax Effort of Indian States in the Era of High Economic Growth, 2001-2014. By Mukherjee, Sacchidananda
  8. The journey from micro supervisory data to aggregate macroprudential statistics By Barbic, Gaia; Borgioli, Stefano; Klacso, Jan
  9. Replicating Anomalies By Kewei Hou; Chen Xue; Lu Zhang

  1. By: Carlino, Laurent; Coppens, François; González, Javier; Ortega, Manuel; Pérez-Duarte, Sébastien; Rubbrecht, Ilse; Vennix, Saskia
    Abstract: Analysis of consolidated accounting data of European listed groups shows significant differences in some key ratios between countries However, the figures do not reveal whether these differences result from a distinct composition of the countries’ populations in terms of branches of activity (structural effect) or from intrinsic disparities in the behaviour of groups from various countries. This paper will address this issue using ratio decomposition techniques. A comparative overview of decomposition methodologies available in the literature will be provided, as well as an in-depth description of the methodology used. This will be applied to decompose the difference in the financial debt ratio, the equity ratio and the EBIT margin across countries for one specific year and to consider any dissimilarities in financial debt ratios over a limited period of time. The study will be based on the data available in the ERICA dataset from the European Committee of Central Balance Sheet Data Offices (ECCBSO), which includes accounting data of listed groups from Austria, Belgium, France, Germany, Greece, Italy, Portugal and Spain. The aggregate ratios of each country will be compared against a benchmark composed of the aggregate ratios for the eight countries together. JEL Classification: C43, L22, L25, M4
    Keywords: decomposition analysis, decomposition techniques, financial ratios
    Date: 2017–05
  2. By: Alberto Behar; Armand Fouejieu
    Abstract: After the decline in oil prices, many oil exporters face the need to improve their external balances. Special characteristics of oil exporters make the exchange rate an ineffective instrument for this purpose and give fiscal policy a sizeable role. These conclusions are supported by regression analysis of the determinants of the current account balance and of the trade balance. The results show little or no relationship with the exchange rate and, especially for the less diversified oil exporters, a strong relationship with the fiscal balance or government spending.
    Keywords: Oil exporters; current account; trade balance; fiscal policy; exchange rates; trade volume elasticities; Marshall Lerner conditions
    JEL: F32 F13 F41 E62
    Date: 2017
  3. By: Stephane Schlotterbeck
    Abstract: Over the past decade, governments in the Caribbean region have introduced the value-added tax (VAT) to modernize their tax system, rapidly mobilize revenue and reduce budget deficits. This paper analyzes VAT performance in the region and concludes that while it has boosted revenues, the VAT has not reached its potential. Intended as a broad-based tax with limited exemptions, a single rate and zero-rating confined to exports, the VAT's design often lacks these characteristics. The paper also finds that although tax administration reforms can boost revenues, countries have just started to address organizational inefficiencies, data integrity issues, and operational ineffectiveness. These reforms need to intensify in order to have a more significant impact on compliance and revenue.
    Keywords: Antigua and Barbuda;Asia and Pacific;Bahamas, The;Barbados;Dominica;Dominican Republic;Grenada;Haiti;Jamaica;Western Hemisphere;Saint Kitts and Nevis;Saint Lucia;Saint Vincent and the Grenadines;Trinidad and Tobago;Tax administratuion reforms, General
    Date: 2017–04–04
  4. By: Marchese, Carla; Venturini, Andrea
    Abstract: In this paper we consider amoral taxpayers who access amoral tax preparers in order to receive help in evading taxes. Taxpayers are aware of having a biased perception of the audit probability, but are unable to correct such bias without the help of a tax preparer. The market for tax preparation, characterized by imperfect competition, is described according to the conjectural variation approach. We show that according to the direction of the bias the tax preparer can suggest either a larger or a smaller evasion with respect to the one that the taxpayer would have implemented without the advice, resulting in an evasion smaller or larger than that observed in tax reports of unbiased taxpayers. Such ambiguity provides a motivation for the ambivalent attitudes of tax administrations towards tax preparers. It also turns out that sanctions on taxpayers are more effective than sanctions on tax preparers in order to deter tax evasion.
    Date: 2017–05
  5. By: McGee, M Kevin
    Abstract: This paper explores the efficiency distortions under two types of destination-based corporate cash-flow taxes. Auerbach and Devereux (2015) have shown that a sales-apportioned cash-flow tax will distort consumer prices; this paper shows that those distortions are generally quite small, and are limited solely to industries in which economic profits are earned, and consump- tion is already significantly distorted. This paper also shows that a border-adjusted cash-flow tax will distort consumption decisions that cross borders, such as travel, higher education, and retirement location. In addition, it would affect labor migration decisions, especially for mi- grants who plan either to migrate only temporarily, or to remit a substantial fraction of their earning back to their home country.
    Keywords: International Corporate Taxation, Cash Flow Tax, Destination-Based Cash Flow Tax, Formula Apportionment
    JEL: H21 H25 H31 H32
    Date: 2017–04–05
  6. By: Irem Guceri; Li Liu
    Abstract: With growing academic and policy interest in research and development (R&D) tax incentives, the question about their effectiveness has become ever more relevant. In the absence of an exogenous policy reform, the simultaneous determination of companies’ tax positions and their R&D spending causes an identification problem in evaluating tax incentives. To overcome this identification challenge, we exploit a U.K. policy reform and use the population of corporation tax records that provide precise information on the amount of firm-level R&D expenditure. Using difference-in-differences and other panel regression approaches, we find a positive and significant impact of tax incentives on R&D spending, and an implied user cost elasticity estimate of around -1.6. This translates to more than a pound in additional private R&D for each pound foregone in corporation tax revenue.
    Keywords: Europe;United Kingdom;Tax incentives; corporation tax returns; quasi-experiment, Tax incentives, corporation tax returns, quasi-experiment, Business Taxes and Subsidies, Innovation and Invention: Processes and Incentives
    Date: 2017–03–31
  7. By: Mukherjee, Sacchidananda (National Institute of Public Finance and Policy)
    Abstract: Growing demand for public expenditures, limitations in expanding fiscal space and limited scope to deviate from common harmonized tax system under the proposed Goods and Services Tax (GST) regime may induce the states to look for opportunities to xpand revenue mobilization through alternative channels (e.g. non-tax revenue mobilization). An assessment of the existing tax efficiency (or tax effort) and strengthening tax administration could be one of such alternatives available for states to pursue. Tax administration is as important as tax base to augment revenues of a state. Efficiency of tax administration helps a state to achieve a stable tax regime which is conducive for introduction of tax reforms measures like GST. Buoyancy of tax revenues of a state is not only dependent on growth in tax base and structure of taxes but also on the state of tax administration. Many papers have been written to estimate tax effort of Indian states. Taking this exercise to the next level, this paper focuses on measuring tax effort and identifying factors that explain variations in the tax effort across states. In measuring tax potential, an attempt has been made to differentiate between factors that determine the tax base and factors that constrain the state from utilizing the available base. The exercise looks at comprehensive revenue collection under Value Added Tax of general category states for the period 2001-02 to 2013-14.
    Keywords: Tax capacity ; Tax efficiency ; Value Added Tax (VAT) ; Stochastic Frontier Approach ; Panel Data Analysis ; States of India
    JEL: H21 H71 H77
    Date: 2017–05
  8. By: Barbic, Gaia; Borgioli, Stefano; Klacso, Jan
    Abstract: The Consolidated Banking Data CBD) are a key component of the ECB/ESCB statistical toolbox for financial stability analysis. This dataset, which contains all the relevant dimensions of systemic risk stemming from and affecting national banking systems, is compiled from firm-level supervisory returns. With the entry into force of the new set of European Banking Authority (EBA) Implementing Technical Standards on Supervisory Reporting in 2014, the whole CBD statistical framework had to be reshaped. In August 2015 the first data for the revised CBD were released. This paper deals with the main issues in the challenging endeavour of transposing firmlevel supervisory returns, often based on different accounting systems, into comprehensive aggregate statistics, while ensuring as far as possible continuity in the time series for indicators and aggregates calculated from different successive data models. At the same time, the new CBD has substantially enlarged the quantity and increased the quality of data, available to the users. This paper provides a description of the database, together with some examples drawn from it. JEL Classification: C82, G21
    Keywords: banking indicators, consolidated banking data, macroprudential analysis
    Date: 2017–05
  9. By: Kewei Hou; Chen Xue; Lu Zhang
    Abstract: The anomalies literature is infested with widespread p-hacking. We replicate the entire anomalies literature in finance and accounting by compiling a largest-to-date data library that contains 447 anomaly variables. With microcaps alleviated via New York Stock Exchange breakpoints and value-weighted returns, 286 anomalies (64%) including 95 out of 102 liquidity variables (93%) are insignificant at the conventional 5% level. Imposing the cutoff t-value of three raises the number of insignificance to 380 (85%). Even for the 161 significant anomalies, their magnitudes are often much lower than originally reported. Out of the 161, the q-factor model leaves 115 alphas insignificant (150 with t
    JEL: G12 G14
    Date: 2017–05

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NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.