nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2020‒07‒27
ten papers chosen by
Alexander Harin
Modern University for the Humanities

  1. 新収益認識基準が企業に及ぼす影響 : 上場企業へのアンケート調査に基づいて By 塚原, 慎; 中村, 亮介; 小澤, 康裕
  2. Multinational Corporations’ Effective Tax Rates: Evidence from Orbis By Javier Garcia-Bernardo; Petr Jansky; Thomas Torslov
  3. Toward a Comprehensive Tax Reform for Italy By Emile Cammeraat; Ernesto Crivelli
  4. Exploring Residual Profit Allocation By Sebastian Beer; Ruud A. de Mooij; Shafik Hebous; Michael Keen; Li Liu
  5. The Tax Cuts and Jobs Act: Which Firms Won? Which Lost? By Alexander F. Wagner; Richard J. Zeckhauser; Alexandre Ziegler
  6. Bank Earnings Management using Commission and Fee Income: the Role of Investor Protection and Economic Fluctuation By Ozili, Peterson K
  7. Expected Effects of the US Tax Reform on Other Countries: Global and Local Survey Evidence By Dorine Boumans; Clemens Fuest; Carla Krolage; Klaus Wohlrabe
  8. Public Good Provision By Chowdhury Mohammad Sakib Anwar; Alexander Matros; Sonali Sen Gupta
  9. How to Design a Financial Management Information System; A Modular Approach By Gerardo Uña; Richard I Allen; Nicolas M Botton
  10. Welfare improving tax evasion By Canta, Chiara; Cremer, Helmuth; Gahvari, Firouz

  1. By: 塚原, 慎; 中村, 亮介; 小澤, 康裕
    Abstract: 本稿では,新収益認識基準が企業の会計実務に及ぼす影響を把握するために,日本の上場企業を対象としてアンケート調査を実施した。具体的には,①新収益認識基準がもたらすコスト・ベネフィットとその程度,②影響が大きいと考えられる会計項目とその程度,③国際財務報告基準との会計処理の一貫性(重要性に関する代替的な取扱い)に関する企業側の見解を調査し,これをもとに分析・考察を行った。, In this paper, we conducted a questionnaire survey of Japanese listed companies to understand the impact of the new revenue recognition standards on their accounting practices. We surveyed firms' views on (1) the costs and benefits of the new revenue recognition standards, (2) the accounting treatment that would be significantly affected by the change in the standard, and (3) the consistency with international financial reporting standards.
    Keywords: 収益認識, 企業会計基準第29号, 国際財務報告基準第15号(IFRS15), アンケート調査, Revenue Recognition, Accounting Standards Board of Japan Statement No.29, International Financial Reporting Standards No.15(IFRS15), Questionnaire Survey
    Date: 2020–07
  2. By: Javier Garcia-Bernardo (University of Amsterdam, Faculty of Social and Behavioural Sciences, Spui 21, 1012 WX Amsterdam, The Netherlands); Petr Jansky (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Opletalova 26, 110 00, Prague, Czech Republic); Thomas Torslov (Faculty of Social Sciences, Oster Farimagsgade 5, DK-1353 Copenhagen K, Denmark)
    Abstract: Effective tax rates (ETRs) estimated from the balance sheet data of multinational corporations (MNCs) are useful for comparing MNCs’ corporate income taxation across countries. In this paper we propose a new methodological approach to estimate ETRs as reliably and as for as many countries as possible using Orbis’ unconsolidated data for the 2011–2015 period. We focus on countries with at least 50 available companies, which results in a sample of 50, mostly European, countries. We estimate the ETR of a country as the ratio of corporate income tax to gross income for all affiliates of MNCs in that country, weighted by gross income. We propose four ETR estimations, including lower and upper bounds, which differ by gross income calculation. We find that ETRs substantially differ from statutory rates for some countries. For example, we show that despite similar statutory rates of 28% and 29%, MNCs in Luxembourg paid as little as 1–8% of gross income in taxes while those in Norway paid as much as 45–66%. Despite being the best available, existing data is still imperfect, and we therefore call for better data in the form of MNCs’ unconsolidated, public country-by-country reporting data.
    Keywords: Effective tax rate, multinational corporation, foreign direct investment, profit shifting, tax haven, tax competition
    JEL: C81 F21 F23 H25 H26
    Date: 2020–06
  3. By: Emile Cammeraat; Ernesto Crivelli
    Abstract: This paper evaluates elements of a comprehensive reform of the Italian tax system. Reform options are guided by the principles of reducing complexity, broadening the tax base, and lowering marginal tax rates, especially the tax burden on labor income. The revenue and distributional implications of personal income and property tax reforms are assessed with EUROMOD, while a microsimulation model is developed to evaluate VAT reform options. Simulations suggest that a substantial reduction in the tax burden on labor income can be obtained with a revenue-neutral base-broadening reform that streamlines tax expenditures and updates the property valuation system. In addition, a comprehensive reform would benefit low- and middle-income households the most, by lowering significantly their overall current tax liability, which results in increased progressivity of the tax system.
    Keywords: Recurrent taxes on immovable property;Tax revenue;Tax reforms;Tax evasion;Tax rates;Italy,personal income tax,VAT,property tax,microsimulations,EUROMOD,WP,tax expenditure,decile,revenue-neutral,reduced rate,revenue loss
    Date: 2020–02–21
  4. By: Sebastian Beer; Ruud A. de Mooij; Shafik Hebous; Michael Keen; Li Liu
    Abstract: Schemes of residual profit allocation (RPA) tax multinationals by allocating their ‘routine’ profits to countries in which their activities take place and sharing their remaining ‘residual’ profit across countries on some formulaic basis. They have recently and rapidly come to prominence in policy discussions, yet almost nothing is known about their impact on revenue, investment and efficiency. This paper explores these issues, conceptually and empirically. It finds residual profits to be substantial, but concentrated in a relatively few MNEs, headquartered in few countries. The impact on tax revenue of reallocating excess profits under RPA, while adverse for investment hubs, appears beneficial for lower income countries even when the formula allocates by destination-based sales. The impact on investment incentives is ambiguous and specific both to countries and MNE groups; only if the rate of tax on routine profits is low does aggregate efficiency seem likely to increase.
    Keywords: Marginal effective tax rate;Low-income developing countries;Gross capital formation;Tax revenue;Effective tax rate;Residual Profit Allocation,International Corporate Taxation,Multinational Firms,WP,residual profit,RPA,excess profit,tangible asset,MNEs
    Date: 2020–02–28
  5. By: Alexander F. Wagner (University of Zurich - Department of Banking and Finance; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI); Swiss Finance Institute); Richard J. Zeckhauser (Harvard University - Harvard Kennedy School (HKS); National Bureau of Economic Research (NBER)); Alexandre Ziegler (University of Zurich - Department of Banking and Finance)
    Abstract: The Tax Cut and Jobs Act (TCJA) slashed corporations’ median effective tax rates from 31.7% to 20.8%. Nevertheless, 15% of firms experienced an increase. One fifth of firms recorded nonrecurring tax costs or benefits exceeding 3% of total assets. Proxies that existing studies employ to assess the TCJA’s impacts account for just half of actual impacts. Stock prices impounded those proxies during the legislative process. Total impacts were impounded the following year, once firms published their financials. These results indicate that investors find it hard to predict even large and immediate changes to company cash flows due to unfamiliar events.
    Keywords: Corporate Taxes, Tax Cut And Jobs Act, Event Study, Market Efficiency, Tax Reform
    JEL: G12 G14 H25 O24
    Date: 2020–06
  6. By: Ozili, Peterson K
    Abstract: We investigate whether banks use commission and fee income to manage reported earnings as an income-increasing or income smoothing strategy. We find that banks use commission and fee income for income smoothing purposes and this behaviour persist during recessionary periods and in environments with stronger investor protection. The implication of the findings is that bank non-interest income which achieves diversification gains to banks is also used to manipulate reported earnings. Our findings show that real earnings management is prevalent among banks in Africa. Further research into earnings management should examine real earnings management among non-financial firms in developing regions. From an accounting standard setting perspective, our evidence suggests the need for national/international standard setters to adopt strict revenue recognition rules that ensure that banks or firms report the actual fees they make, and to discourage banks from delaying (or deferring) the collection of fee income to manage or smooth reported earnings opportunistically.
    Keywords: Earnings management, Commission and Fee Income; Non-interest Income; Real Earnings Management; Income smoothing; Economic Condition; Investor Protection; Banks.
    JEL: G2 G21 M00 M1 M21 M4 M41 M42 M48 M49
    Date: 2019
  7. By: Dorine Boumans; Clemens Fuest; Carla Krolage; Klaus Wohlrabe
    Abstract: The Tax Cuts and Jobs Act constitutes the largest change to the US tax system since the 1980s and thoroughly alters the way in which multinational companies are taxed. Current assessments on the reform’s international impact vary widely. This article sheds light on the tax reform’s expected effects on other countries. We first use representative German business survey data to analyze the impact of the reform on German firms. Many firms with substantial US revenues or capacities in the US intend to expand US investment in response to the reform, in particular large firms and manufacturing companies. The effects on investment in Germany are ambiguous: While some firms substitute between investment locations, others expand in both countries. We subsequently extend our analysis to a global level using worldwide survey data. The results suggest a negative impact on tax revenues and investment in countries with close economic ties to the US.
    Keywords: US tax reform, Tax Cuts and Jobs Act, corporate tax, firm responses, survey, Germany
    JEL: H25 H32 D22 F23 E62
    Date: 2020
  8. By: Chowdhury Mohammad Sakib Anwar; Alexander Matros; Sonali Sen Gupta
    Abstract: We develop a model that links tax evasion, corruption, and public good provision. In our model, citizens pay or evade taxes into the public fund, which a corrupt governor redistributes. Each citizen forms expectations about the amount of public goods the governor should provide. After observing the actual level of public goods, a citizen punishes the governor if this level is below his expectations. We describe three types of equilibria: tax evasion, efficient public good provision, and symmetric mixed-strategy. We show that the highest expectations can lead to no free riding (tax evasion) and the efficient level of public good provision even with the corrupt governor and without punishment for tax evasion.
    Keywords: Tax evasion, Audits, Embezzlement, Corruption, Sanctions, Public goods
    JEL: H40 D83 D73
    Date: 2020
  9. By: Gerardo Uña; Richard I Allen; Nicolas M Botton
    Abstract: A well-functioning financial management information system (FMIS) provides timely, reliable, and comprehensive reports that support implementation of the government’s fiscal policies and fiscal rules, and the formulating, controlling, monitoring, and executing of the budget. The architecture of FMISs has undergone a transformation since these systems were first developed in the 1980s. Rather than attempting to cover all or most public financial management (PFM) functions, many FMISs now focus on a few core functions such as accounting and reporting, budget execution, and cash management. Yet a survey of 46 countries shows that many face severe challenges in transforming their FMIS into an effective tool of fiscal governance. These challenges relate to weaknesses in the system’s core functions, its institutional coverage, the information technology platforms it uses, and the ease of sharing data with other IT systems. This How to Note discusses how to address these chal-lenges. Replacing an FMIS with an entirely new system may not be an optimal strategy. By utilizing the latest technology, a better approach may be to update or replace one or more core modules of the system: the so-called modular approach. Implementation of an effective FMIS, however, depends on two critical preconditions: strong political motivation and commitment, and the system’s ability to meet ongoing and anticipated PFM needs.
    Keywords: Financial management information systems;Financial Management Information Systems, fiscal policy, fiscal rules, accounting, reporting, budget execution, cash management
    Date: 2019–05–15
  10. By: Canta, Chiara; Cremer, Helmuth; Gahvari, Firouz
    Abstract: We study optimal income taxation in a framework where one's willingness to report his income truthfully is positively correlated with his type. We show that allowing low-productivity types to cheat leads to Pareto-superior outcomes as compared to deterring them, even if audits can be performed costlessly. When there is no cheating, redistribution takes place on first- and second-best frontiers and can never make low-ability types more well-off than high-ability types. Letting low-ability types cheat allows first-best redistribution up to a limit at which low-ability types are better off than high-ability types.
    Keywords: Optimal taxation, tax evasion, audits, welfare-improving.
    JEL: H20 H21 H26
    Date: 2020–07

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