nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2020‒05‒25
four papers chosen by

  1. Corporate taxes and firms' performance: A meta-frontier approach By Ana María Iregui-Bohórquez; Ligia Alba Melo-Becerra; Antonio José Orozco-Gallo
  2. The Impact of the 2016 Finance Act on Investment into Irish Real Estate Funds By McCarthy, Barra
  3. What lessons can be learned from capital income tax reforms? By Laurent Bach; Antoine Bozio; Brice Fabre; Arthur Guillouzouic; Claire Leroy; Clément Malgouyres
  4. The Balanced Scorecard – Dinosaur or Giant? By Schulke, Arne

  1. By: Ana María Iregui-Bohórquez (Banco de la República de Colombia); Ligia Alba Melo-Becerra (Banco de la República de Colombia); Antonio José Orozco-Gallo (Banco de la República de Colombia)
    Abstract: Corporate taxes play an important role in the firm's decision-making as they are part of the cost of capital. Thus, understanding the effect of taxes on the performance of firms in the context of frequent tax reforms, as is the case of Colombia, is of great relevance. We use meta-frontier stochastic techniques,which allow us to estimate in two-steps the technical effciency of firms within each economic sector and between economic sectors in relation to the set of firms in the country. Then, using quantile regression analysis, we estimate both the effect of corporate taxation on firm performance as well as the effect of efficiency on firms' tax payments. Results indicate that firms in some economic sectors could be benefiting form better production conditions and that the most effcient firms within each sector paid more taxes, as a share of assets. However, when compared to the meta-frontier, firms with higher effciency paid less taxes, suggesting differences in the tax burden of firms across economic sectors. **** RESUMEN: Los impuestos corporativos juegan un papel importante en la toma de decisiones de las empresas, ya que son parte del costo de uso del capital. Por lo tanto, estudiar la relación entre los impuestos corporativos y el desempeño de las empresas es de gran relevancia, en un contexto de frecuentes reformas tributarias, como es el caso de Colombia. Para el análisis se utilizan técnicas de meta-frontera estocástica que permiten estimar, en dos etapas, la eficiencia técnica de las empresas dentro de cada sector económico y entre sectores económicos en relación con el conjunto de empresas en el país. Luego, se utiliza el análisis de regresión cuantílica para estimar tanto el efecto de los impuestos corporativos sobre el desempeño de las empresas, como el efecto de la eficiencia sobre los pagos de impuestos. Los resultados indican que las empresas, en algunos sectores económicos, podrían beneficiarse de mejores condiciones de producción y que las más eficientes dentro de cada sector pagan más impuestos, como proporción de sus activos. Sin embargo, cuando se comparan con la frontera de producción global del país, las empresas con mayor eficiencia pagan menos impuestos, lo que sugiere diferencias en la carga tributaria entre sectores económicos.
    Keywords: Corporate taxes, Stochastic frontier analysis, firm performance, Impuestos corporativos, frontera estocástica, desempeño empresas
    JEL: C23 D22 H25
    Date: 2020–05
  2. By: McCarthy, Barra (Central Bank of Ireland)
    Abstract: This paper analyses the impact that the 2016 Finance Act on investment into Irish real estate investment funds (IREFs). The Act introduced a 20% tax rate on the distributions and capital gains from IREF equity for most foreign investors. To understand the impact of this change, a novel investor-level dataset is analysed using difference-in-difference and triple difference models. I find that the average investor whose tax status changed did not alter their investment behaviour, relative to investors whose tax status did not change. Investors who were the only investor in a fund (single investors) responded by reducing net subscriptions by 16.6-18.5 percentage points more than other investors who saw their tax status change. This corresponds to an elasticity of around -1. Estimating the regressions in an event study format, it becomes clear that single investors’ reaction to the tax change was concentrated in Q4 2016, the period during which the tax was announced but before it came into effect. Consulting the financial statements of these funds, an explanation emerges - a substantial minority of single investor funds responded to the tax change by providing loans to fund dividends and redemptions. Constructing a series for shareholder lending from the financial statements, I am able to confirm this empirically. Therefore, the primary, but unintended, consequence of the 2016 IREF tax was the swapping of equity for shareholder loans by single investor funds, in an effort to reduce their tax liability resulting from the policy change.
    Keywords: Real Estate Investment Funds, Taxation, Financial Economics
    JEL: H2 G18 R3
    Date: 2020–03
  3. By: Laurent Bach (ESSEC Business School - Essec Business School, IPP - Institut des politiques publiques); Antoine Bozio (IPP - Institut des politiques publiques, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics); Brice Fabre (PSE - Paris School of Economics, IPP - Institut des politiques publiques, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique); Arthur Guillouzouic (IPP - Institut des politiques publiques); Claire Leroy (IPP - Institut des politiques publiques); Clément Malgouyres (IPP - Institut des politiques publiques)
    Abstract: The abolition of the flat-rate withholding tax (prélèvement forfaitaire libératoire – PFL) in 2013 and the introduction of the unique flat tax (prélèvement forfaitaire unique – PFU) in 2018 are two important – and contrary – capital income tax reforms. The first aimed to "restore tax justice" while the second aimed to "promote private investment". Using the tax data of households and companies, we evaluate the impact of the 2013 reform and present preliminary findings regarding the impact of the 2018 reform. We find raising capital income taxes to have a strong negative impact on dividends received by households, and no impact on other types of income (pay, capital gains and other capital income). Using company data, we identify the mechanism explaining this decrease in dividends received: companies directly controlled by natural persons residing in France reduced or stopped the distribution of dividends between 2013 and 2017. We observe an increase in the financial assets held by these companies, an increase in equity capital and a decrease in net result, but not effect on investment. The implications of these findings are major: the 2013 reform led to a net loss in tax receipts but had no negative impact on investment. Based on data from commercial court registries, there was a 15.3% increase in dividends paid in 2018, attributable to the unique flat tax reform. This increase in the distribution of dividends, parallel to the decrease in 2013, will lead to greater tax receipts than initially anticipated. However, in light of the effects of the 2013 reform, it appears unlikely that this reform will have a positive effect on private investment.
    Date: 2019–10
  4. By: Schulke, Arne
    Abstract: No concept of corporate management has spread as quickly in global business practice as the Balanced Scorecard (BSC) by Robert S. Kaplan and David P. Norton. This discussion paper examines its origins, theoretical foundation, practical distribution and key points of criticism in the literature a quarter of a century after its inception. The paper is based on a former publication by the same author in the German WISU journal.
    Keywords: Management Accounting,Controlling,Balanced Scorecard,Management Control
    JEL: M10 M11 M40
    Date: 2020

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