nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2019‒09‒09
three papers chosen by

  1. Disentangling tax evasion from inefficiency in firms tax declaration: an integrated approach By Giancarlo Ferrara; Arianna Campagna; Vincenzo Atella
  2. What if dividends were tax-exempt? Evidence from a natural experiment By Isakov, Dusan; Pérignon, Christophe; Weisskopf, Jean-Philippe
  3. Residential Property Price Indexes: Spatial Coordinates versus Neighbourhood Dummy Variables By Diewert, Erwin; Shimizu, Chihiro

  1. By: Giancarlo Ferrara (SOSE - Soluzioni per il Sistema Economico S.p.A); Arianna Campagna (SOSE - Soluzioni per il Sistema Economico S.p.A); Vincenzo Atella (SOSE, CEIS & DEF University of Rome "Tor Vergata")
    Abstract: In this article we present a new methodology to support fiscal monitoring by the Italian Revenue Agency (IRA) with the aim of improving current taxpayers fiscal compliance and fighting tax evasion within small and medium enterprises. In fact, given the methodology behind the Sector Studies (Studi di Settore - SdS) system, there is room for firms to implement tax evasion strategies by simply adjusting revenues (and costs) toward an estimated average threshold (known ex-ante), the so called "presumptive" revenues, and achieving the fiscal "congruity" status. By estimating a production function through stochastic frontier analysis we avoid estimating the average threshold know ex-ante and can combine information on firm economic efficiency with those on fiscal congruity, thus being able to disentangle underreporting of revenues due to potential firm tax evasion behaviours from underreporting due to firm inefficiencies. We apply this framework to two samples of Italian firms belonging to two Sector Studies. Our results confirm the potentiality of the approach, although more work is needed before moving to a large scale implementation for policy purposes.
    Keywords: Compliance, Tax evasion, Fiscal monitoring, Production, Sector Studies, Efficiency.
    Date: 2019–09–06
  2. By: Isakov, Dusan; Pérignon, Christophe; Weisskopf, Jean-Philippe
    Abstract: We study the effect of dividend taxes on the payout and investment policy of listed firms and discuss their implications for agency problems. To do so, we exploit a unique setting in Switzerland where some, but not all, firms were suddenly able to pay tax-exempted dividends to their shareholders following the corporate tax reform of 2011. Using a difference-in-differences specification, we show that treated firms increased their payout by around 30% compared to control firms after the tax cut. Differently, treated firms did not concurrently or subsequently increase investment. We show that the tax-inelasticity of investment was due to a significant drop in retained earnings ̶ as the rise in dividends was not compensated by an equally-sized reduction in share repurchases. Furthermore, treated firms did not raise more equity than control firms. Lastly, we show that an unintended consequence of cutting dividend taxes is to mitigate the agency problems that arise between insiders and minority shareholders.
    Keywords: corporate taxes; dividends; payouts; investment; agency problems.
    JEL: G35 G38 H25 K34
    Date: 2019–02–19
  3. By: Diewert, Erwin; Shimizu, Chihiro
    Abstract: The paper addresses the following question: can satisfactory residential property price indexes be constructed using hedonic regression techniques where location effects are modeled using local neighbourhood dummy variables or is it necessary to use spatial coordinates to model location effects. Hill and Scholz (2018) addressed this question and found, using their hedonic regression model, that it was not necessary to use spatial coordinates to obtain satisfactory property price indexes for Sydney. However, their hedonic regression model did not estimate separate land and structure price indexes for residential properties. In order to construct national balance sheet estimates, it is necessary to have separate land and structure price indexes. The present paper addresses the Hill and Scholz question in the context of providing satisfactory residential land price indexes. The spatial coordinate model used in the present paper is a modification of Colwell’s (1998) spatial interpolation method. The modification can be viewed as a general nonparametric method for estimating a function of two variables.
    Keywords: Residential property price indexes, System of National Accounts, Balance Sheets, methods of depreciation
    JEL: C2 C14 C21 C23 C25 C43 E31 R21
    Date: 2019–09–05

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