nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2017‒09‒17
nine papers chosen by

  1. Determinants of Registration of Unincorporated Enterprises under State Value Added Tax Act in India By Mukherjee, Sacchidananda; Rao, R. Kavita
  2. Economic importance of the Belgian ports: Flemish maritime ports, Liège port complex and the port of Brussels - Report 2015 By Claude Mathys
  3. Foreign ownership and financial reporting quality in private subsidiaries By Belén Gill de Albornoz Noguer; Simona Rusanescu
  4. The Credibility of Commitment and Optimal Nonlinear Savings Taxation By Jang-Ting Guo; Alan Krause
  5. Towards a European R&D Incentive? An assessment of R&D Provisions under a Common Corporate Tax Base By Diego d’Andria; Dimitris Pontikakis; Agnieszka Skonieczna
  6. Impact of accounting and financial manipulations around mergers and acquisitions on shareholders' perception By Ghribi Rihab; Jarboui Anis
  7. The regulation of transparency in the field of CSR By Franck Aggeri; Morgane Le Breton
  8. Going with the flow: corruption in tax agencies By Hamilton Carvalho; Joaquim Rocha; Marcelo Ramos; Eduardo Franco; José Mazzon
  9. Banks in Tax Havens: First Evidence based on Country-by-Country Reporting By Vincent Bouvatier; Gunther Capelle-Blancard; Anne-Laure Delatte

  1. By: Mukherjee, Sacchidananda; Rao, R. Kavita
    Abstract: Unincorporated enterprises often bypass formal regulations in general and taxation in particular. Bringing unincorporated enterprises under taxation system is a challenge often faced by tax administrators and it is in this regard the present study explores the factors which influence decision of unincorporated enterprises to get registered with State Value Added Tax (VAT)/ sales tax authority. This analysis is limited to the decision regarding registration. It is not necessary that enterprises which are registered will pay taxes and/or file return- however; the process of registration does provide some information to the tax department for follow up. The study throws up some interesting results for policy makers and tax administrators.
    Keywords: Tax Registration, Unincorporated Enterprises, Informality, Value Added Tax (VAT), Partnership Firms, Proprietary Enterprises, Probit Model, India.
    JEL: H25 H26 H32 L53
    Date: 2017–09–08
  2. By: Claude Mathys (NBB, Microeconomic Information department)
    Abstract: This paper is an annual publication issued by the Microeconomic Analysis service of the National Bank of Belgium. The Flemish maritime ports (Antwerp, Ghent, Ostend, Zeebrugge), the Autonomous Port of Liège and the port of Brussels play a major role in their respective regional economies and in the Belgian economy, not only in terms of industrial activity but also as intermodal centers facilitating the commodity flow. This update paper1 provides an extensive overview of the economic importance and development of the Flemish maritime ports, the Liège port complex and the port of Brussels for the period 2010 - 2015, with an emphasis on 2015. Focusing on the three major variables of value added, employment and investment, the report also provides some information based on the social balance sheet and an overview of the financial situation in these ports as a whole. These observations are linked to a more general context, along with a few cargo statistics. Annual accounts data from the Central Balance Sheet Office were used for the calculation of direct effects, the study of financial ratios and the analysis of the social balance sheet. The indirect effects of the activities concerned were estimated in terms of value added and employment, on the basis of data from the National Accounts Institute. As a result of the underlying calculation method the changes of indirect employment and indirect value added can differ from one another. The developments concerning economic activity in the six ports in 2014 - 2015 are summarized in the table on the next page. In 2015 the growth of maritime traffic in the Flemish maritime ports was due to developments in the port of Antwerp and the port of Ghent. Direct value added increased in all Flemish maritime ports in 2015. However, direct employment is continuing to decline. Investment was down everywhere except in the port of Zeebrugge. Cargo traffic in the Liège port complex declined in 2015, whereas it slightly slowed down in the port of Brussels. At the same time, direct value added in Liège shrank while it rose sharply in the port of Brussels. By contrast, direct employment was down in both ports. This report provides a comprehensive account of these issues, giving details for each economic sector, although the comments are confined to the main changes that occurred in 2015.
    Keywords: Flemish maritime ports, Liège port complex and the port of Brussels – Report 2015
    JEL: C67 H57 J21 L22 L91 L92 R15 R34 R41
    Date: 2017–06
  3. By: Belén Gill de Albornoz Noguer (Universitat Jaume I); Simona Rusanescu (Dpto. Finances i Comptabilitat)
    Abstract: In a sample of large private Spanish subsidiaries, we find that the magnitude ofdiscretionary accruals is significantly higher when the parent company is foreign thanwhen it is local. Our tests support the thesis of recent research on earnings management strategies within multinational corporations (MNCs), suggesting that the parent company’s incentives underlie the observed negative relation between foreignownership and financial reporting quality at the subsidiary level. In particular, weobserve that: (1) the tenure of the controlling shareholder has a negative incrementaleffect on financial reporting quality in firms under foreign control, but not insubsidiaries of local groups; and (2) the negative association between foreign ownershipand financial reporting quality is mainly driven by the subsample of subsidiaries withparent companies located in countries with higher institutional quality than Spain.
    Keywords: foreign ownership; private firms; subsidiaries; earnings management;
    JEL: F23 M41 M48
    Date: 2017–08
  4. By: Jang-Ting Guo; Alan Krause
    Abstract: Abstract: We compare optimal nonlinear savings taxation under different assumptions with regard to the government's ability to commit to its future tax policy. In particular, we incorporate the possibility that individuals may differ in their beliefs regarding the probability of commitment. When these beliefs are homogeneous, we find that optimal marginal savings tax rates always fall between those under the polar cases of full-commitment (zero marginal savings taxation) and no-commitment (progressive marginal savings taxation). However, this result no longer holds when beliefs are postulated to be heterogeneous. The effects of beliefs changing in response to past commitment or no-commitment decisions by the government are also quantitatively explored.
    Keywords: Savings taxation, commitment, multi-dimendional screening
    JEL: E69 H21 H24
    Date: 2017–09
  5. By: Diego d’Andria (European Commission – Joint Research Center); Dimitris Pontikakis (European Commission – Joint Research Center); Agnieszka Skonieczna (European Commission)
    Abstract: EU businesses underinvest in R&D which is a driver of economic growth and productivity. While the world is becoming more R&D-intensive, the relative weight of the EU is decreasing, mainly due to the rapid rise of China. Taxation has been increasingly used to stimulate investment in R&D. A recent proposal for a Common Consolidated Corporate Tax Base (CCCTB) across the European Union (EU) includes an R&D incentive. This paper presents the rationale for the inclusion of R&D provisions, quantifies the subsidy implied by alternative options using the user's cost approach and approximates aggregate impacts by means of simple extrapolations from elasticities found in literature. We find that the CCCTB without an R&D incentive would significantly deteriorate incentives to invest in R&D. We present alternative options and argue that the level of support should be ambitious to address the pressing need in the EU to invest more, stay globally competitive and reach the EU's target of investing 3% of its GDP in R&D. Importantly, to take full advantage of the opportunities offered by this tax reform, EU member states will have to coherently mobilise a range of policies and engage in complementary non-tax interventions in their national innovation systems. We conclude with a broad consideration of what these may be for the varied and variably developed business innovation capabilities found across the EU.
    Keywords: Corporate taxation, R&D, innovation, CCCTB, R&D tax incentives
    JEL: F21 H25 H73 O31
    Date: 2017–07
  6. By: Ghribi Rihab (Technologie d´Information, Gouvernance et Entrepreneuriat « LARTIGE » - Faculty of Economic Science and Management, Sfax University, Sfax, Tunisia); Jarboui Anis (Technologie d´Information, Gouvernance et Entrepreneuriat « LARTIGE » - Faculty of Economic Science and Management, Sfax University, Sfax, Tunisia)
    Abstract: This paper provides an analysis of earnings management by the shareholders in a mergers and acquisitions setting, recognising that such opportunistic behaviour can have irreversible wealth consequences for both target and acquirer shareholders. The purpose of this study is to examine the role of earning management and the associated importance from the perspective of shareholders. In other words, we set up a brief discussion of the acquirers firms' motivations for practicing earnings management. Earnings management is not only induced
    Keywords: acquiring firms, mergers & acquisitions operations, earnings managements,shareholders' perception
    Date: 2016–09–23
  7. By: Franck Aggeri (CGS i3 - Centre de Gestion Scientifique i3 - MINES ParisTech - École nationale supérieure des mines de Paris - PSL - PSL Research University - CNRS - Centre National de la Recherche Scientifique); Morgane Le Breton (CGS i3 - Centre de Gestion Scientifique i3 - MINES ParisTech - École nationale supérieure des mines de Paris - PSL - PSL Research University - CNRS - Centre National de la Recherche Scientifique)
    Abstract: What does it mean for a corporation to be transparent in terms of Corporate Social Responsibility (CSR)? The search for transparency is presented as a key driver of a sustainability policies (Gray, 1992; Milne, Kearins, & Walton, 2006). Yet, transparency in practice – as it is materialized through standards – is far from transparency in principle. The gap between the ostensive and performative aspects of transparency have to be analyzed (Latour, 1984). In this paper, we propose to study practices and processes, i.e. the way in which transparency is materialized into specific instruments and technologies that currently govern corporate conducts: private CSR reporting standards. For that purpose, we analyze two widely diffused CSR corporate standards (the GRI and the CDP), stressing the shiftings between the original discourses on transparency of their promoters to their implementation into a set of tools and technologies. We highlight and discuss a risk of capture of transparency principles by the auditing profession who is at the forefront of such standards.
    Keywords: CSR Disclosure,Standards,Audit,Transparency,Governmentality,Instrument,Management technology
    Date: 2016–07–06
  8. By: Hamilton Carvalho (USP - University of São Paulo); Joaquim Rocha (USP - University of São Paulo); Marcelo Ramos (USP - University of São Paulo); Eduardo Franco (USP - University of São Paulo); José Mazzon (USP - University of São Paulo)
    Abstract: Corruption is a widespread "wicked " problem in the world, whose roots are still poorly understood by policy makers. The paper summarized the findings from the behavioral ethics literature, assembling a model to explain the creation and solidification of a culture of corruption in tax agencies in Brazil. The model represents the conversion of honest tax auditors into corrupt ones based on a process of rationalization that responds to social norms, the magnitude of illegal rewards, perceived risk and job quality. Four policies are simulated and only a policy that combines multiple interventions produces positive results. Overall, the model shows that a culture of corruption can be created and disseminated in few years, becoming resistant to change inasmuch as corrupt auditors occupy management positions and create alliances with politicians.
    Keywords: Corruption, Behavioral ethics, Brazil
    Date: 2016–07–17
  9. By: Vincent Bouvatier; Gunther Capelle-Blancard; Anne-Laure Delatte
    Abstract: Since the Great Financial Crisis, several scandals have exposed a pervasive light on banks' presence in tax havens. Taking advantage of a new database, this paper provides a quantitative assessment of the importance of tax havens in international banking activity. Using comprehensive individual country-by-country reporting from the largest banks in the European Union, we provide several new insights: 1) Tax havens attract large extra banking activity beyond the regular gravity factors (+168% according to our estimates); 2) For EU banks, the main tax havens are located within Europe: Luxembourg, Isle of Man and Guernsey rank at the top of the foreign affiliates; 3) Attractive low tax rates are not sufficient to drive extra activity; 4) High quality of governance is not a driver, but banks avoid countries with weakest governance; 5) Banks also avoid the most opaque countries; 6) The tax savings for EU banks is estimated between €1 billion and €3.6 billion, i.e. 5 and 20% of fiscal revenues.
    Keywords: Tax evasion;International banking;Tax havens;Country-by-country reporting
    JEL: F23 G21 H22 H32
    Date: 2017–09

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