nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2019‒11‒04
five papers chosen by

  1. France; Financial Sector Assessment Program-Technical Note-Balance Sheet Risks and Financial Stability By International Monetary Fund
  2. Utilizing Incentives and Accountability: In Control in Control? By van Rinsum, M.
  3. Steuerreformvorschläge des Mirrlees Committee und der Stiftung Marktwirtschaft By Schock, Matthias Malte
  4. Transfer Pricing and Corporate Social Responsibility: Arguments, Views and Agenda By Simplice A. Asongu; Joseph I. Uduji; Elda N. Okolo-Obasi
  5. Price mediated contagion through capital ratio requirements By Tathagata Banerjee; Zachary Feinstein

  1. By: International Monetary Fund
    Abstract: Macroprudential policy setting faces the challenge of identifying growth of financial and macroeconomic variables above and below potential. The gaps between actual performance and potential are crucial for policy makers but are unobserved. This is especially true for financial variables such as capital and risk of default of borrowers (firms and banks) and lenders (banks and households). Against this backdrop, a macrofinancial structural model is presented that captures (i) sectoral dynamics of firms and banks and feedbacks between them, (ii) capital and default risk dynamics of each sector, (iii) capital and risk gaps i.e., deviations of capital and default risk from potential (the welfare maximizing optimum), and it provides (iv) a quantitative method for measurement.
    Date: 2019–10–28
  2. By: van Rinsum, M.
    Abstract: Objectivity and transparency are often considered to be desirable attributes of a performance measurement and incentive system. Subjectivity, on the other hand, is typically equated with bias and has a negative connotation. But accounting research shows us that a degree of subjectivity, in other words, allowing leeway for supervisors’ judgments in evaluations, is usually optimal. I argue that we should switch to the term ‘discretion’, to be better able to communicate its benefits. Moreover, I discuss the benefits and costs of discretion and of transparency. I surmise that a balance between objectivity and discretion is required, and that transparency is definitely not always desirable. Furthermore, I discuss how discretion relates to the way in which managers are held accountable. Holding managers accountable for outcomes is not always optimal, yet pervasive. Finally, I outline future research opportunities on discretion and accountability, apply the insights about performance measurement to the academic working environment, and promote the use of new research methods.
    Keywords: prestatiebeoordeling, transparantie, objectivity, subjectivity, discretion, incentives, accountability, transparency, performance evaluation, measurement system, management control, management accounting
    JEL: M41
    Date: 2019–09–20
  3. By: Schock, Matthias Malte
    Abstract: This study describes, compares, and evaluates tax reform proposals by the British "Mirrlees Committee" and the German "Stiftung Marktwirtschaft". It considers both theoretical and administrative issues.
    Keywords: Steuerreform, Mirrlees Committee, Stiftung Marktwirtschaft
    JEL: H20
    Date: 2019
  4. By: Simplice A. Asongu (Yaoundé/Cameroon); Joseph I. Uduji (University of Nigeria, Nsukka, Nigeria); Elda N. Okolo-Obasi (University of Nigeria, Nsukka, Nigeria)
    Abstract: The central thesis of the paper is that Multinational Companies (MNC) should invest in the use of “soft†methods (socially responsible behavior) to mitigate costs in society accrued due to use of “hardcore†tax evasion tactics (Transfer mispricing) to maximize profits from operations in developing countries and/or countries with weak or inefficient tax laws and tax collection institutions. Therefore, we articulate the argument of Corporate Social Responsibility (CSR) as an indirect compensation for transfer mispricing. Our aim is not to present CSR as solution to transfer mispricing. An analytical approach is based on a content analysis of the existing literature with emphasis on a case study. We first discuss the dark side of transfer pricing (TP), next we present the link between TP and poverty and finally we advance arguments for CSR as a compensation for transfer mispricing. While acknowledging that TP is a legal accounting practice, we argue that in light of its poverty and underdevelopment externalities, the practice per se should be a strong defence for CSR because it is also associated with schemes that deprive developing countries of the capital essential for investment in health, education and development programmes.
    Keywords: Corporate Social Responsibility; Transfer pricing; Extreme poverty
    JEL: F20 H20 M14 O11
    Date: 2019–01
  5. By: Tathagata Banerjee; Zachary Feinstein
    Abstract: We develop a framework for price-mediated contagion in financial systems where banks are forced to liquidate assets to satisfy a risk-weight based capital adequacy requirement. In constructing this modeling framework, we introduce a two-tier pricing structure: the volume weighted average price that is obtained by any bank liquidating assets and the terminal mark-to-market price used to account for all assets held at the end of the clearing process. We consider the case of multiple illiquid assets and develop conditions for the existence and uniqueness of clearing prices. We provide a closed-form representation for the sensitivity of these clearing prices to the system parameters, and use this result to quantify: (1) the cost of regulation faced by the system as a whole and the individual banks, and (2) the value of providing bailouts and bail-ins to consider when such notions are financially advisable. Numerical case studies are provided to study the application of this model to data.
    Date: 2019–10

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