nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2020‒02‒17
four papers chosen by

  1. Tax-induced earnings management and book-tax conformity: International evidence from unconsolidated accounts By Eichfelder, Sebastian; Jacob, Martin; Kalbitz, Nadine; Wentland, Kelly
  2. What Can We Learn from the Timing of Interbank Payments? By Adam Copeland; Linsey Molloy; Anya Tarascina
  3. Investigating double counting terms in the value-added decomposition of gross exports By Miroudot, Sébastien; Ye, Ming
  4. Measuring Intangible Capital with Market Prices By Ewens, Michael; Peters, Ryan; Wang, Sean

  1. By: Eichfelder, Sebastian; Jacob, Martin; Kalbitz, Nadine; Wentland, Kelly
    Abstract: We quantify the degree of tax-induced earnings management associated with statutory tax rates and examine whether greater book-tax conformity alters this particular type of earnings management. We first validate a new empirical approach for examining tax-induced earnings management using European unconsolidated financial and ownership information over 2005-2013. We provide robust evidence of significant tax-induced earnings management in both domestic and multinational firms. In particular, the results suggest that a 10 percentage point increase in the corporate tax rate relates to an 8.2 percent decrease in pre-tax book income. We then document that firms in countries with greater book-tax conformity engage in additional tax-induced earnings management. This is important given that it contrasts with prior literature, which does not find an effect for book-tax conforming transactions with a change in conformity.
    Keywords: tax-induced earnings management,book-tax conformity,conforming tax avoidance
    JEL: H25 H26 M41
    Date: 2020
  2. By: Adam Copeland (Research and Statistics Group; National Bureau of Economic Research; Federal Reserve Bank of New York; Federal Reserve Bank; University of Minnesota); Linsey Molloy; Anya Tarascina (Research and Statistics Group)
    Abstract: From 2008 to 2014 the Federal Reserve vastly increased the size of its balance sheet, mainly through its large-scale asset purchase programs (LSAPs). The resulting abundance of reserves affected the financial system in a number of ways, including by changing the intraday timing of interbank payments. In this post we show that (1) there appears to be a nonlinear relationship between the amount of reserves in the system and the timing of interbank payments, and (2) with the increase in reserves, smaller banks shifted their timing of payments more significantly than larger banks did. This result suggests that tracking the timing of payments sent by banks could provide an informative signal about the impact of the shrinking Federal Reserve balance sheet on the payments system.
    Keywords: intraday credit; balance sheet normalization; paymanets
    JEL: G2
  3. By: Miroudot, Sébastien; Ye, Ming
    Abstract: Several papers using intercountry input-output tables have developed frameworks to decompose value added in gross exports and to remove potential double-counting in intermediate inputs. But these papers rely on different definitions for the domestic value added, foreign value added and double-counting terms, depending in particular on the perspective from which gross exports are decomposed (world level, country level or bilateral level). At this stage, it is very difficult for any user of value-added trade statistics to know what is calculated and which type of decomposition should be used. In this paper, we provide a general framework that relies on extraction matrices to unambiguously and consistently define domestic and foreign value-added terms in the world, country and bilateral perspective. This framework allows us to classify existing decompositions based on the perspective taken and their definition of double-counting. We also indicate the most relevant decompositions for different types of trade analysis.
    Keywords: Trade accounting,input-output table, Value-added decomposition, Global value chains, double counting
    JEL: D57 E01 E16 F14
    Date: 2019–05–01
  4. By: Ewens, Michael (California Institute of Technology); Peters, Ryan; Wang, Sean
    Abstract: Existing standards prohibit disclosures of internally created intangible capital to firm balance sheets, resulting in a downward bias of reported assets. To characterize off-balance sheet intangible assets, we use transaction prices to estimate this missing intangible capital. On average, our new measure of intangible capital is 10\% smaller than prior estimates, while varying more by industry. These estimates better explain market values, increase HML portfolio returns, act as a better proxy for human capital and brand rankings, and exhibit a strong association with patent values.
    Date: 2019–12–24

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