nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2018‒02‒19
eight papers chosen by

  1. Financial realities for farms in the European Union: Relationships between farming and governmental interactions within the Triple Helix concept By Martinho, Vítor João Pereira Domingues
  2. Statutory tax rates on dividends, interest and capital gains: The debt equity bias at the personal level By Michelle Harding; Melanie Marten
  3. Firms’ financial surpluses in advanced economies:the role of net foreign direct investments By Tatiana Cesaroni; Riccardo De Bonis; Luigi Infante
  4. Mind the (current account) gap By Joy, Mark; Lisack, Noemie; Lloyd, Simon; Reinhardt, Dennis; Sajedi, Rana; Whitaker, Simon
  5. A missing link in the analysis of global value chains: cross-border flows of intangible assets, taxation and related measurement implications By Thomas S. Neubig; Sacha Wunsch-Vincent
  6. Examining business performance of micro, small and medium scale enterprise through accounting records keeping; case study in Ghana By Tweneboah Senzu, Emmanuel; Ndebugri, Haruna
  7. Intangible assets and transactions within multinational enterprises: implications for national economic accounts By Dylan G. Rassier
  8. Evaluation of Individual and Group Lending under Asymmetric information By Peter Simmons; Nongnuch Tantisantiwong

  1. By: Martinho, Vítor João Pereira Domingues
    Abstract: The objective of this study is to analyse the financial realities for the farming sector in European Union countries and their relationships with agricultural investment and public structural subsidies, from a perspective of farming- and governmental relationships as part of the Triple Helix approach. Firstly, the statistical information available within the Farm Accountancy Data Network for the former twenty seven European Union countries, related with the main items of the accounting balance sheet was investigated. Secondly, various financial indicators were calculated to analyse the principal financial constraints in these farms and finally, these findings with the levels of investment and structural support were reported. As a main conclusion, more adjusted structural policies in the European Union will be needed, taking these microeconomic contexts into account.
    Keywords: Farming sector,Structural subsidies,Accountancy information,European Union,Triple Helix
    JEL: E22 M41 O52 Q12
    Date: 2018
  2. By: Michelle Harding; Melanie Marten
    Abstract: This paper presents statutory tax rates on several forms of capital income, including dividends, interest on bonds and bank accounts, and capital gains on shares and real property, including integration between the corporate and personal levels. It updates the rates from an earlier tax working paper (Harding, 2013) and extends the analysis to consider the debt-equity bias of the tax system when the personal level of taxation is considered.
    Keywords: Capital income taxation, Debt-equity bias
    Date: 2018–02–15
  3. By: Tatiana Cesaroni (Bank of Italy); Riccardo De Bonis (Bank of Italy); Luigi Infante (Bank of Italy)
    Abstract: According to macroeconomic predictions firms are expected to be net borrowers: the net change of their financial assets should be smaller than the net change of their financial liabilities. However, since the mid-1990s, the non–financial sector has been on average a net lender in countries such as Japan, the UK, Germany and the Netherlands. Conversely firms remained on average net borrowers in countries such as France, Italy and the US. Using financial accounts, we investigate the sources of corporate sector surpluses and deficits applying panel data techniques. Our statistics include 18 industrial countries over the period 1995-2014. We find that firms’ surpluses are structurally linked to net foreign direct investments. The econometric results are robust to the use of variables that control for the business cycle, such as the output gap, the ratio of corporate investment to GDP, firms’ profits and leverage, and taxation.
    Keywords: Net lending/net borrowing, corporate sector, global saving glut, panel data
    JEL: E2 G3
    Date: 2018
  4. By: Joy, Mark (Bank of England); Lisack, Noemie (Bank of England); Lloyd, Simon (Bank of England); Reinhardt, Dennis (Bank of England); Sajedi, Rana (Bank of England); Whitaker, Simon (Bank of England)
    Abstract: There is substantial evidence that openness to trade raises economic growth and boosts living standards. But trade liberalisation has been asymmetric, focused on goods rather than services trade. The decline in goods trade barriers may have favoured countries specialising in goods, like China, Germany and Japan, allowing them to increase exports relative to imports, and contributing to their persistent current account surpluses. By contrast, countries like the United States and the United Kingdom, who specialise in the services sector where trade is more restricted, have been running persistent deficits. This pattern of persistent surpluses and deficits in these key countries has proven hard to explain in the International Monetary Fund’s External Balance Assessment methodology. This paper suggests that asymmetric trade liberalisation is one overlooked explanation. We demonstrate how realistic additions to textbook economic models allow trade policy to have persistent effects on current account imbalances. We also find empirical support for significant quantitative effects. These results suggest that liberalising services trade, levelling up to the liberalisation seen in goods trade, could reduce excess global imbalances by around 40%. Moreover it could contribute to higher and more inclusive global growth.
    Keywords: Comparative advantage; Current account; Global imbalances; Services trade policy; Trade liberalisation
    JEL: F13 F14 F15 F32
    Date: 2018–01–24
  5. By: Thomas S. Neubig; Sacha Wunsch-Vincent
    Abstract: Understanding cross-border flows of disembodied knowledge, often associated with intellectual property (IP), is essential to analyzing how modern economies operate. This paper documents how available data to document these IP flows are distorted by various factors, including tax planning by multinational enterprises. It finds that tax-induced mismeasurement could be more than 35%, and greater for individual countries particularly high-tax-rate countries.
    Date: 2017–11
  6. By: Tweneboah Senzu, Emmanuel; Ndebugri, Haruna
    Abstract: The research study, seek to critically examine and empirically justify the exact role and benefit, financial records keeping does to the performance of start-ups and management of micro, small and medium scale enterprises in Ghana.
    Keywords: MSMEs efficient management, MSMEs Accounting records keeping, Microeconomics, Macroeconomics, SMEs
    JEL: D2 M13 M41
    Date: 2018–01–19
  7. By: Dylan G. Rassier
    Abstract: Transactions involving intangible assets within multinational enterprises impose challenges for national economic accountants. In light of the challenges, recent research at the United States Bureau of Economic Analysis aims to identify areas for improving the treatment of multinational enterprises in national economic accounts. This paper summarizes the work and demonstrates implications for gross domestic product – the most widely cited measure in national economic accounts – of the United States.
    Date: 2017–11
  8. By: Peter Simmons; Nongnuch Tantisantiwong
    Abstract: The paper attempts to find the socially best loan contract by comparing exante welfare, interest and default rates of individual and group lending. We introduce a general framework which allows auditing policies and interest rates to be simultaneously determined by maximising the social welfare. Both variables vary with the types of risk considered: independently identically distributed and positively correlated risk. An individual project outcome is private information of its owner, but reported outcomes can be audited at a cost which then publicly reveals the true project outcome. We find that incentive compatibility in a group loan context is delicate: the conditions for truth telling vary with the borrowers’ perception of the overall solvency of the group. In addition, group loans are often made to local groups who have established local networks. This may mean that the group has cheaper policing of truthtelling, but also that the risks on projects within the group are likely to be correlated. To explore this, we numerically solve for the optimal contracts with varying audit cost differences and correlation, using a betabinomial distribution. We find that with an audit cost advantage, small group loans (typically to two borrowers) dominate individual loans even with correlation. But if audit costs are identical, the individual loan dominates. In the larger the group, the higher the audit probability is required to ensure truthtelling. Our finding provides an argument for why the number of borrowers should be limited to 2-5.
    Keywords: Group lending, Heterogeneous and Correlated risk, Welfare, Loan Auditing
    JEL: D81 G21
    Date: 2018–02

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