nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2019‒03‒11
seven papers chosen by

  1. Games and Network Structures on Corruption, Income Inequality, and Tax Control By Elena Gubar; Edgar Javier Sanchez Carrera; Suriya Kumacheva; Ekaterina Zhitkova; Galina Tomilina
  3. The importance of reputation in the auditing of companies: A game theory analysis By Dassiou, X.; Glycopantis, D.
  4. Republic of Slovenia; Selected Issues By International Monetary Fund
  6. The Intangibles Song in Takeover Announcements: Good Tempo, Hollow Tune By Filipovic, Zoran; Wagner, Alexander F
  7. On the impact of capital and liquidity ratios on financial stability By Pierre Durand

  1. By: Elena Gubar (Faculty of Applied Mathematics and Control Processes, St. Petersburg State University); Edgar Javier Sanchez Carrera (Department of Economics, Society & Politics, Università di Urbino Carlo Bo); Suriya Kumacheva (Faculty of Applied Mathematics and Control Processes, St. Petersburg State University); Ekaterina Zhitkova (Faculty of Applied Mathematics and Control Processes, St. Petersburg State University); Galina Tomilina (Faculty of Applied Mathematics and Control Processes, St. Petersburg State University)
    Abstract: IWe study taxpayers’ decisions according to their personal income, individual preferences with respect to the audit and tax control information perceived in their social environment. We consider that citizens are classified by two social groups, the rich and the poor. When public authorities are corrupt, we show that the poor group is the most affected by corruption. However, when taxpayers are corrupt or tax evaders, we implement mechanisms to audit and control this corrupt behaviour. We show that this situation can be represented by several well-known theoretical games. Then, evolutionary dynamics of the game in networks considering that each taxpayer receives information from his neighbours about the probability of audit is analyzed. Our simulation analysis shows that the initial and final preferences of taxpayers depend on important parameters, i.e. taxes and fines, audit information and costs.
    Keywords: Behavioral economics; Corrupt behavior; Income distribution; Income taxation system; Network Games; Population games
    JEL: C72 C73 O11 O12 O55 K42
    Date: 2018
  2. By: suhardi, suhardi
    Abstract: This article aims to examine the conflicting paradigm in accounting research and development from the point of view of the philosophy of science. Each adherent is both mainstream and alternative, assuming that their point of view is the most scientific approach and more suitable for developing the discipline of accounting scholarship. This article also agrees on the use of a multiparadigm approach as a space for researchers so that it does not have to be trapped in a single point of view, it would be better to paradigm each other interact and synergize to produce strength. Accounting research and development can be approached from the point of view of the philosophy of science. From any point of view the paradigm used in researching and developing whether the mainstream or accounting alternative is a product of knowledge that has no absolute truth, so it is not necessary to differentiate the way of view in researching accounting into a contradiction that can negate the essence of epistemology, ontology, and axiology
    Keywords: scientific truth, multi-paradigmatic, philosophy of science
    JEL: M40 M41 M48
    Date: 2017–12
  3. By: Dassiou, X.; Glycopantis, D.
    Abstract: Numerous, mainly empirical, studies of auditing behaviour have recently looked at the “reputation” of the auditor and the size of fees it attracts. Our model of the auditing market advances the study of the fundamental principles involved in determining behaviour in relation to the rewards and penalties using an extensive-form game of the auditing process. We set up a two-player fraud detection game with bribes, bonuses and fines faced by an auditor. Our model yields that the auditor’s reputation, reflected in the size of bonuses, is critical to establishing a non-fraudulent behaviour by the client. Hence the model confirms expected behaviour. We further find the new insight, that while the existence of penalties deters fraud by the client, their size is not critical. This is a new understanding of what determines auditor behaviour. It is the perception of a possible penalty that moves the auditor in the direction of executing a thorough investigation using his acquired expertise.
    Keywords: interdependent decisions; auditor reputation; game theory; perfect Bayesian equilibria
    Date: 2019
  4. By: International Monetary Fund
    Abstract: Selected Issues
    Keywords: Tax revenue;Revenue measures;Tax reforms;Tax system reviews;Revenue sources;revenue potential;rebalance;revenue-neutral;vat rate;consumption tax
    Date: 2019–02–19
  5. By: Anabela Marques Santos; Michele Cincera
    Abstract: Access to finance is a key driver of business activities. It can help firms to grow and innovate. However, due to market failures innovative firms are usually more financinally constrained. To improve access to financing for risky but excellent R&D and innovation investment projects, a new debt-financing instrument called “Risk Sharing Finance Facility” was created in 2007, by a joint initiative of the European Commission and the European Investment Bank. Based on a macro-economic analysis, the aim of the paper is to assess the effect of this new debt-financing instrument on enhancing private R&D expenditure. The database used covers the 28 Member States of the European Union in the period 2007-2016. Private R&D decision is estimated by a function of output growth and several R&D policy instruments. The methodological approach is based on a fixed effect model with control function method in order to correct for endogenous bias of Risk Sharing Finance. The results reveal a positive and significant effect of the new EU policy financing instrument on Private R&D expenditure and its rate of return seems to be higher than that of grants or subsidies. Furthermore, in countries where government funding for private R&D expenditure is above the average, the effect of Risk Sharing Finance shows a lower marginal effect. No evidence of significant differences concerning the size of the effect of the new debt-financing instrument is found when differentiating the level of R&D tax incentives.
    Keywords: Financing, Innovation, Risk
    Date: 2018–12
  6. By: Filipovic, Zoran; Wagner, Alexander F
    Abstract: Mergers and acquisitions are often motivated by the intention of creating value from intangible assets. We develop a novel word list of intangibles and apply it to takeover announcements. Deals presented with more "intangibles talk" complete more quickly. However, the value of these deals to the acquirer is questionable: One standard deviation more in intangibles talk results in 0.45 percentage points lower abnormal announcement returns of bidders. Agency problems explain little of these results. Instead, payment mode choices and insider trades suggest that intangibles talk reflects managerial overoptimism. Overall, takeover announcements can provide important information regarding the quality of deals.
    Keywords: Corporate announcements; intangible assets; intangibles talk; mergers and acquisitions; Takeovers; textual analysis
    JEL: G14 G34
    Date: 2019–03
  7. By: Pierre Durand
    Abstract: In response to the 2007-2008 global financial crisis, the G20 mandated the Basel Committee to put in place prudential regulations capable of ensuring financial stability: the Basel III agreements. This paper tackles this issue by investigating the impact of capital and liquidity ratios on financial stability for a sample of 1600 banks from 23 countries over the 2005-2016 period. We pay particular attention to the nonlinear character of this potential effect through the estimation of a polynomial model with interaction terms and a panel smooth transition regression. Distinguishing between different types of banks depending on their level of systemicity, we find evidence of a nonlinear effect of prudential ratios on financial stability: a low level of capital improves financial stability, but its effect tends to diminish for higher values. Finally, we show that bank profitability is a significant determinant of financial stability.
    Keywords: Basel III ratios ; financial stability ; interaction effects ; Panel Smooth Transition Regression
    JEL: C33 G21 G38
    Date: 2019

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