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on Accounting and Auditing |
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Issue of 2020‒08‒10
twelve papers chosen by |
| By: | Lionel Escaffre (GRANEM - Groupe de Recherche Angevin en Economie et Management - UA - Université d'Angers - AGROCAMPUS OUEST - Institut National de l'Horticulture et du Paysage) |
| Abstract: | Accounting treatment of provisions for expected losses applicable to trade receivables under IFRS 9 Lionel Escaffre Professor of Universities (University of Angers) Statutory auditor member of the CRCC in Paris 1. The principle of accounting for provisions for expected losses IFRS 9 standard relating to financial instruments is applicable to financial years beginning on January 1, 2018. In addition to the accounting treatment of hedging instruments, the standard covers the recognition and measurement of all financial assets and liabilities, and therefore receivables are financial instruments according to the international accounting framework. As in IAS 39, receivables are therefore classified as financial assets and subject to impairment tests. The impairment test applicable in IAS 39 was based on the principle of the proven loss model. In this case, the provision was based on the recognition of a risk which led to impairment. IFRS 9 introduces a new impairment model called "expected loss model", which will require faster recognition of expected losses based on statistical modeling. This statistical model, which can take the form of a matrix, is established based on a past and contextual analysis of the risks of non-recovery on certain types of receivables. In other words, IFRS 9 requires accounting for the expected impairment according to a statistical model from the initial recognition of the receivable. The estimated economic loss corresponds to the expected loss assessed beyond that originally assessed. The same impairment model applies to all financial assets regardless of the type of receivables or loans envisaged. This model based on expected credit losses is a response to the financial crisis of 2008. Indeed in its arguments, the IASB specifies in IFRS 9 (§ BC5.83) that this model is likely to provide users financial statements useful information on the amount, timing and uncertainty of the economic benefits generated by financial instruments. In addition, the international standard setter meets the limits of IAS 39, limits formulated by some |
| Abstract: | Le traitement comptable des provisions pour pertes attendues applicables aux créances commerciales en IFRS 9 Lionel Escaffre Professeur des Universités (Université d'Angers) Commissaire aux comptes membre de la CRCC de Paris 1. Le principe de comptabilisation des provisions pour pertes attendues La norme IFRS 9 relative aux instruments financiers est applicable aux exercices ouverts au 1 er janvier 2018. Outre le traitement comptable des instruments de couverture, la norme couvre la comptabilisation et l'évaluation de tous les actifs et passifs financiers, en conséquence les créances sont des instruments financiers selon le référentiel comptable international. Comme en IAS 39, les créances sont donc classées en actifs financiers et sous soumises à des tests de dépréciation. Le test de dépréciation applicable en IAS 39 était fondé sur le principe du modèle des pertes avérées. La provision reposait dans ce cas sur le constat d'un risque qui conduisait à une dépréciation. La norme IFRS 9 instaure un nouveau modèle de dépréciation intitulée « modèle des pertes attendues », qui nécessitera une reconnaissance plus rapide des pertes prévues en fonction d'une modélisation statistique. Ce modèle statistique qui peut prendre la forme d'une matrice est établie en fonction d'une analyse passée et contextuelle des risques de non-recouvrement sur certaines typologies de créances. Autrement dit, la norme IFRS 9 impose une comptabilisation de la dépréciation attendue selon une modélisation statistique dès la comptabilisation initiale de la créance. La perte économique estimée correspond à la perte attendue appréciée au-delà de celle évaluée à l'origine. Le même modèle de dépréciation s'applique à tous les actifs financiers quelque soit le type de créances ou de prêts envisagés. Ce modèle fondé sur les pertes de crédit attendues est une réponse à la crise financière de 2008. En effet dans son argumentaire, l'IASB précise dans la norme IFRS 9 (§ BC5.83) que ce modèle est de nature à fournir aux utilisateurs des états financiers des informations utiles sur le montant, le calendrier et l'incertitude des avantages économiques générés par les instruments financiers. Par ailleurs, le normalisateur international répond aux limites d'IAS 39, limites formulées par certains |
| Date: | 2019–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-02860931&r=all |
| By: | Kim, Hyung-Tae; Lee, Seungwon; Park, Sung-Jin; Lee, Brandon |
| Abstract: | We investigate the extent to which a client’s innovative effort affects the level of audit effort and whether the innovative-effort efficiency can attenuate the demand for greater audit effort associated with a client’s risky research-and-development (R&D) investments. We find that a client firm’s strategic emphasis on corporate innovations may require greater audit effort, but the efficiency of a firm’s innovative effort can attenuate the demand for heightened audit effort against risky, innovative efforts. Findings suggest that the external auditor does not always discourage corporate innovation as the efficiency of a firm’s innovation may lower the client business risk perceived by an auditor. |
| Keywords: | Corporate innovation; Auditors; Research and development; Risk management |
| JEL: | M42 O32 |
| Date: | 2019–05–27 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:101081&r=all |
| By: | Baptiste Souillard |
| Abstract: | This paper examines the effect of import competition on corporate tax avoidance. I exploit the rapid surge of China’s exports as a competition shock and balance sheets and income statements to measure tax avoidance of US-headquartered publicly listed manufacturing firms. The baseline results reveal that a 1 percentage point increase in the penetration ratio of US imports from China entails, on average, a 0.20 percentage point decrease in the effective tax rate. They are supported by a series of sensitivity tests and robust to using the US conferral of the Permanent Normal Trade Relations status on China in late 2000 as a quasi-natural experiment. Furthermore, the results are entirely driven by multinational firms. In response to the China shock, these firms invested in intangible assets, and these intangibles allowed them to shift more profits towards low-tax countries. These findings shed light on the determinants of corporate tax avoidance. More generally, they help understand the decline in the average effective tax rate of US publicly listed firms and the recent backlash against large firms and globalization. |
| Keywords: | Corporate tax avoidance; multinational firms; import competition; intangibles; profit shifting |
| JEL: | F14 F60 H25 H26 L60 |
| Date: | 2020–07 |
| URL: | http://d.repec.org/n?u=RePEc:eca:wpaper:2013/309985&r=all |
| By: | José M. Labeaga (UNED); Juan A. Ester Martínez-Ros (Universidad Carlos III de Madrid); Amparo Sanchis-Llopis (University of Valencia and ERICES); Juan A. Sanchis-Llopis (University of Valencia and ERICES) |
| Abstract: | Despite the generosity of its tax system, Spain is far from EU neighbouring countries in terms of R&D spending, and in innovation outcomes. A policy instrument commonly used to foster firms’ investment in R&D are tax incentives. The use of this instrument is not generalized in firms spending on R&D, and only a fraction of firms are regular claimants. In this paper we investigate whether persistence in using tax credits is positively related to the achievement of product innovations, beyond R&D investments. We consider that firms investing in qualified R&D spending and making a regular use of tax credits are likely to be firms aiming at innovating. By contrast, occasional tax credit users are probably firms seeking to reduce their corporate tax burden, and not prioritizing the achievement innovations. Using a sample of Spanish manufacturing firms spanning 2001-2014, we first estimate persistence using a duration model accounting for firm observed and unobserved heterogeneity. Our results are consistent with negative duration dependence, indicating that the probability of ceasing in claiming tax credits decreases with the passage of time. Second, we estimate a count-data model and find that the number of product innovations positively depends on tax credit persistence only for SMEs. |
| Keywords: | tax credits; persistence; duration dependence; count-data |
| JEL: | C41 H25 H32 |
| Date: | 2020–07 |
| URL: | http://d.repec.org/n?u=RePEc:eec:wpaper:2003&r=all |
| By: | Julien Martin; Mathieu Parenti; Farid Toubal |
| Abstract: | This paper argues that tax avoidance by large corporations has contributed to the 25% increase in concentration among U.S. firms since the mid-1990s. Corporate tax avoidance gives large firms a competitive edge, which translates into larger market shares and an increase in the granularity of the economy. We develop IV and difference-in-differences strategies that show the causal impact of tax avoidance on firm-level sales. Had firms not resorted to tax avoidance in 2017, our results imply that the average industry concentration would have been 8.3% lower, which is around its early 2000 level. |
| Keywords: | Tax Avoidance;Industry Concentration;IRS Audit Probability |
| JEL: | D22 H26 L11 D4 F23 |
| Date: | 2020–07 |
| URL: | http://d.repec.org/n?u=RePEc:cii:cepidt:2020-09&r=all |
| By: | Majdeline El Rayess; Avril Halstead; Jason Harris; John Ralyea; Alexander F. Tieman |
| Abstract: | Public sector balance sheets (PSBS) provide a framework for comprehensive and deep analysis of fiscal risks and policies. To illustrate these benefits, this paper shows how PSBS analysis can be applied to assess risks to Indonesia’s public sector stemming from its public corporations. The paper also shows that the government’s plans to finance a ramp-up in public investment with additional tax revenue increases both economic growth and public wealth. |
| Keywords: | Financial soundness indicators;Economic growth;Interest rate increases;Real interest rates;Public financial corporations;Public Sector Balance Sheet,Intertemporal Fiscal Balances,Public Investment,Indonesia.,intertemporal,tax-financed,public corporation,percent of GDP,non-financial |
| Date: | 2019–04–24 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:2019/081&r=all |
| By: | Reza C. Daniels (School of Economics, University of Cape Town); Safia Khan (School of Economics, University of Cape Town) |
| Abstract: | This paper evaluates the composition of household portfolios including assets, liabilities and net worth in the National Income Dynamics Study (NIDS) wave 5 (SALDRU, 2018). The inclusion of a top up sample of 1005 households made the sample more representative of the South African population – particularly the higher end of the wealth distribution, which was previously under-represented because of panel attrition between Waves 1-4. This resulted in an increase in the estimates of real total household assets and liabilities (after the removal of outliers), bringing the distribution closer to the macroeconomic household balance sheet estimates of assets and liabilities provided by the SA Reserve Bank (SARB), which implies that the top-up sample also improved the external validity of the wealth data. We find that household balance sheets are dominated by real estate and vehicular assets and debts, with notable exceptions in different covariate domains. In terms of inequality between waves 4 and 5 of NIDS, there has been a slight decrease in the Gini coefficient on net-worth despite the top-up sample, but an increase in the Gini coefficient on financial assets. The overall conclusion of the paper is that the NIDS Wave 5 wealth module is fit for purpose and researchers can conduct a wide range of analyses with the data, but researchers still need to conduct their own outlier detection checks before commencing analyses. |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ldr:wpaper:248&r=all |
| By: | Laurent Bach (ESSEC Business School - Essec Business School, IPP - Institut des politiques publiques); Antoine Bozio (PSE - Paris-Jourdan Sciences Economiques - 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, 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, IPP - Institut des politiques publiques, Institute for Fiscal Studies); 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 (PSE - Paris School of Economics, IPP - Institut des politiques publiques, IEP Paris - Sciences Po Paris - Institut d'études politiques de Paris); Claire Leroy (IPP - Institut des politiques publiques, PSE - Paris School of Economics); Clément Malgouyres (IPP - Institut des politiques publiques, PSE - Paris School of Economics) |
| Abstract: | We estimate the tax elasticity of dividends using two recent French re- forms: a hike in the dividend tax rate followed, five years later, by a cut. To follow the cash movements within the balance sheets of households and firms caused by these reforms, we use newly-accessible personal and cor- porate tax registries. Following the tax increase, the elasticity of dividends equals four and there is no shifting towards other personal income cate- gories. We find instead an increase in companies' spending. After the tax decrease, payouts revert to their initial level, but not enough to offset the amounts received during the high-tax period. |
| Keywords: | Firm behavior,Dividend tax,Intertemporal income shifting |
| Date: | 2019–12 |
| URL: | http://d.repec.org/n?u=RePEc:hal:ipppap:halshs-02415470&r=all |
| By: | Chen, Ping-ho; Chu, Angus C.; Chu, Hsun; Lai, Ching-Chong |
| Abstract: | This paper investigates optimal capital taxation in an innovation-driven growth model. We examine how the optimal capital tax rate varies with externalities associated with R&D and innovation. Our results show that the optimal capital tax rate is higher when (i) the "stepping on toes effect" is smaller, (ii) the "standing on shoulders effect" is stronger, or (iii) the extent of creative destruction is greater. Moreover, the optimal capital tax rate and the monopolistic markup exhibit an inverted-U relationship. By calibrating our model to the US economy, we find that the optimal capital tax rate is positive, at a rate of around 11.9 percent. We also find that a positive optimal capital tax rate is more likely to be the case when there is underinvestment in R&D. |
| Keywords: | Optimal capital taxation; R&D externalities; innovation |
| JEL: | E62 O31 O41 |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:101228&r=all |
| 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 |
| URL: | http://d.repec.org/n?u=RePEc:hal:ipppap:halshs-02515994&r=all |
| By: | André Decoster (KU Leuven - Catholic University of Leuven - Katholieke Universiteit Leuven); Koen Dedobbeleer (KU Leuven - Catholic University of Leuven - Katholieke Universiteit Leuven); Sebastiaan Maes (KU Leuven - Catholic University of Leuven - Katholieke Universiteit Leuven) |
| Abstract: | Belgium is notoriously absent from the World Wealth and Income Database (http://wid.world/), the rapidly expanding international source of comparable data for research on income and wealth inequality. This paper reports on a first attempt to fill this gap. We correct and complete published data on net taxable incomes for the period 1990-2013 to comply with the standards set by the WID database, as expressed in the population control and the income control. Our results show that inferring evolutions of the income share of the top 10% or 1% from published tables of net taxable income is highly misleading. After correction, there is little evidence that top income shares in Belgium have increased during the last 25 years. In contrast to similar analyses for the UK, US, Germany, and to a lesser extent France and the Netherlands, we do not find a clear increase in the income share of the top decile. Also, the significant increase in the income share for the top one percent in many countries, cannot easily be replicated for Belgium. However, some caution is needed. The correction for missing income, preliminary though it is, points to the crucial role played by both our definition of the income reference total and of changing definitions and/or conventions in the National Accounts. |
| Keywords: | Fiscal Data,Top Incomes,income inequality,Belgium,DINA,Distributional National Accounts |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-02877002&r=all |
| By: | Yanlin Chen (Nanjing Audit University); Jun Zhang (University of Technology Sydney) |
| Abstract: | This paper investigates how a privately informed seller could signal her type through Bayesian persuasion and pricing strategy. We find that it is generally impossible to achieve separation through one channel alone. Furthermore, the outcome that survives the intuitive criterion always exists and is unique. This outcome is separating, for which a closed-form solution is provided. The signaling concern forces the high-type seller to disclose inefficiently more information and charge a higher price, resulting in fewer sales and lower profit. Finally, we show that a regulation on minimal quality could potentially hurt social welfare, and private information hurts the seller. |
| Keywords: | Bayesian persuasion; signaling; information disclosure; informed principal |
| JEL: | D82 D83 L12 |
| Date: | 2019–12–01 |
| URL: | http://d.repec.org/n?u=RePEc:uts:ecowps:2019/14&r=all |