nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2020‒10‒19
eleven papers chosen by

  1. Gross capital flows and the balance-of-payments: a balance sheet perspective By Karsten Kohler
  2. Tax misperception and its effects on decision making: A literature review By Blaufus, Kay; Chirvi, Malte; Huber, Hans-Peter; Maiterth, Ralf; Sureth-Slaone, Caren
  3. An economic assessment of the evolution of the corporate tax system in Italy By Ernesto Zangari
  4. Does the Wealth Tax Kill Jobs? By Bjørneby, Marie; Markussen, Simen; Røed, Knut
  5. The Public Accounts of the Basque Economic Agreement in Times of Change and Economic Crisis (1929-1935). Quantitative Sources and Accounting Methodology By Mikel Erkoreka
  6. Corporate taxation and investment of multinational firms: Evidence from firm-level data By Valentine Millot; Åsa Johansson; Stéphane Sorbe; Sebastien Turban
  7. Staff-related disclosures as an element of social policies on the model of Bulgarian black sea hotels By Georgieva, Daniela; Georgieva, Teodora
  8. Firm Characteristics and Corporate Governance Disclosure in Integrated Reports By Raimo, Nicola; Zito, Marianna; Caragnano, Alessandra
  9. When do firms highlight their effective tax rate? By Flagmeier, Vanessa; Müller, Jens; Sureth, Caren
  10. Contabilidad intermedia y superior. Selección de ensayos y apuntes By Rodríguez, Alberto Alejandro
  11. A non-parametric index of corporate governance in the banking industry: an application to Indian data By Gulati, Rachita; Kattumuri, Ruth; Kumar, Sunil

  1. By: Karsten Kohler (King’s College London)
    Abstract: Gross capital flows have gained increasing attention in empirical research over the last decade. Due to their effects on current accounts and financial stability, gross flows are highly relevant for key issues in macroeconomics, political economy, and public policy. However, the exact relationship between gross flows, net flows and current accounts is often poorly understood. These notes aim to clarify some basic features and implications of gross capital flows. Balance-of-payments and balance-sheet accounting is utilised to illustrate how different kinds of gross flows play out on domestic balance sheets and in the balance-of-payments. Organised around nine propositions, the notes clarify the relationship between gross flows, net flows, and trade flows; explain some interesting properties of pure financial flows; discuss issues related to exchange rates and currency unions; and clarify the nature of sudden stop crises.
    Keywords: Gross capital flows, balance-of-payments, current account, imbalances, trilemma, TARGET2, sudden stop
    JEL: F31 F32 F36 F41
    Date: 2020–10
  2. By: Blaufus, Kay; Chirvi, Malte; Huber, Hans-Peter; Maiterth, Ralf; Sureth-Slaone, Caren
    Abstract: Previous accounting research shows that taxes affect decision making by individuals and firms. Most studies assume that agents have accurate perception regarding their tax burden. However, there is a growing body of literature analyzing whether taxes are indeed perceived correctly. We review 124 studies on the measurement of tax misperception and its behavioral implications. The review reveals that many taxpayers have substantial tax misperceptions that lead to biased decision making. We develop a Behavioral Taxpayer Response Model on the impact of provided tax information on tax perception. Besides individual traits, characteristics of the tax information and the decision environment determine the extent of tax misperception. We discuss opportunities for future research and methodological limitations. While there is much evidence on tax misperception at the individual level, we hardly find any research at the firm level. Little is known about the real effects of managers' tax misperception and on how tax information is strategically managed to impact stakeholders. This research gap is surprising as a large part of the accounting literature analyzes decision making and disclosure of firms. We recommend a mixed-method approach combining experiments, surveys, and archival data analyses to improve the knowledge on tax misperception and its consequences.
    Keywords: Behavioral Taxation,Business Taxation,Misperception,Real Effects,Tax Perception,Tax Policy
    JEL: M41 H24 H25 D91
    Date: 2020
  3. By: Ernesto Zangari (Bank of Italy)
    Abstract: This paper provides an assessment of the evolution of the Italian corporate tax system over the last decade through the computations of new and updated effective tax rates. The analysis takes into account the specificities of Italy’s Allowance for Corporate Equity (ACE) and looks at the evolution of market interest rates to evaluate the effects. It relies on a new method to measure the effect of the limits to the deductibility of the cost of debt. Over the period 2010-2020, the legislative changes led to effective taxation becoming highly volatile. This dynamic was mostly driven by the evolution of the ACE regime. Since 2016, the temporary tax incentives for purchasing machinery greatly reduced the cost of capital. However, since 2019 the provision that phased out the incentives at higher-levels of investment may have lowered their effectiveness for larger firms. The analysis also shows that ACE has better economic properties than the Mini-Ires regime that replaced it temporarily in 2019, in terms of incentive to invest and to increase equity funding.
    Keywords: taxation, effective tax rates, corporate taxation, EMTR, allowance for corporate equity
    JEL: H25 H32 H71
    Date: 2020–09
  4. By: Bjørneby, Marie (The Norwegian University of Life Sciences); Markussen, Simen (Ragnar Frisch Centre for Economic Research); Røed, Knut (Ragnar Frisch Centre for Economic Research)
    Abstract: Fueled by increasing inequality and rising fiscal deficits, the interest in wealth taxation has increased over the last years, both in the public debate and in academia. Yet, knowledge about the behavioral effects of a wealth tax is limited. We utilize rich Norwegian register data and a series of tax reforms implemented between 2007 and 2017 to study how a net wealth tax imposed on owners of small and medium sized businesses affects their firms' investment and employment decisions. Identification of causal effects is based on a generalized difference-in-differences strategy. We find no empirical support for the claim that a moderate wealth tax adversely affects investments and employment in firms controlled by the taxpayers. To the contrary, our results indicate a positive causal relationship between the level of a household's wealth tax and subsequent employment growth in the firm it controls. The rationale behind this result appears to be that the tax value of a given wealth can be reduced by being invested in a non-traded firm, and that this incentive becomes stronger the higher is the wealth tax.
    Keywords: wealth tax, capital taxation, labor demand, investment
    JEL: H21 J23 G11
    Date: 2020–10
  5. By: Mikel Erkoreka (Centro de Documentaci—n e Investigaci—n del Concierto Econ—mico y las Haciendas Forales, Universidad del Pa’s Vasco / Euskal Herriko Unibertsitatea (UPV/EHU). Spain)
    Abstract: The main aim of this working paper is to publish the original series of the annual accounts of the Provincial Councils of çlava, Biscay and Gipuzkoa between 1920 and 1935. The budget statistics provide information on revenue, expenditure, tax collection and public debt of the three institutions. In addition, it also develops a methodological model in order to rebuild the historical tax and budgetary series of the Basque treasuries from a long-term perspective, whilst facilitating their comparison with the Spanish and other States accounts.
    Keywords: Basque Economic Agreement, Basque Provincial Councils, Basque Public Treasuries, Spanish Public Treasury, Public Finances, Fiscal Federalism, Great Depression 1929.
    JEL: H61 H77 H83 N01
    Date: 2020–09
  6. By: Valentine Millot; Åsa Johansson; Stéphane Sorbe; Sebastien Turban
    Abstract: This paper explores the effect of corporate taxes on the investment of multinational enterprises (MNEs), and whether this effect differs across MNE groups depending on their profitability rate. Firm-level analysis conducted on a cross-country panel of MNE entities confirms the earlier finding that MNE investment in a jurisdiction is negatively affected by effective corporate tax rate increases in that jurisdiction. The analysis also suggests that the tax sensitivity of MNE investment differs across entities belonging to different MNE groups, with a U-shape relationship between tax sensitivity and MNE group profitability. Entities belonging to groups with negative profitability or relatively high profitability rates are found to be relatively less sensitive than those belonging to groups with lower but positive profitability rates. For example, the estimated tax sensitivity of firms in MNE groups with a profitability rate above 10% is found to be nearly half the sensitivity of a firm in an MNE group with a profitability rate between 0% and 10%. This has implications with regard to the tax reform proposals currently under discussion by the OECD/G20 Inclusive Framework on BEPS, as this suggests that highly profitable MNE groups, which are more likely to be impacted by the proposals, may be less sensitive to taxes in their investment behaviour than the typical MNE.
    Date: 2020–10–12
  7. By: Georgieva, Daniela; Georgieva, Teodora
    Abstract: The main aim of the study is to analyse published information on staff-related social policies on the websites and in the annual financial statements of enterprises that manage hotels and provide hotel services in the territory of Varna and Burgas Black Sea regions in Bulgaria. In addition, analysed are some factors that impact disclosures in the financial statements of enterprises. The adopted research methods are the logical, deductive and comparative methods, as well as the methods of analysis and synthesis. To verify the author's hypotheses the IBM – SPSS Statistics software, ver. 19 has been used. The main results of the study show that the analysed hotel enterprises disclose scarce or no information on staff related data and social policies on their websites or in their financial statements. Disclosures mainly focus on compliance with legal requirements and they are most significantly influenced by available audit control and selected accounting basis. This could lead to asymmetry in the data, lowering the prestige of the organisation, problems with recruitment of qualified staff and unjustified economic decisions by data users
    Keywords: Disclosures, Social Policy, Staff, Hotel Enterprises, Factors, Financial Statements, Websites
    JEL: M14 M48 M49
    Date: 2020–05
  8. By: Raimo, Nicola; Zito, Marianna; Caragnano, Alessandra
    Abstract: In recent years, the debate on corporate governance has considerably grown worldwide. In this scenario, corporate governance disclosure is gaining greater attention and the advent of integrated reporting offers a new interesting channel to companies for the dissemination of corporate governance information. This study aims at investigating the factors that can affect the level of corporate governance disclosure included in the integrated reports. Our analysis, conducted on a sample of 85 international companies shows that firm size and profitability positively influence the level of corporate governance disclosure. Moreover, it demonstrates a negative impact of CEO duality on corporate governance disclosure level.
    Keywords: Integrated reporting,Corporate governance,Disclosure,Corporate reporting,Firm characteristics
    Date: 2020
  9. By: Flagmeier, Vanessa; Müller, Jens; Sureth, Caren
    Abstract: This study examines the visibility of the GAAP effective tax rate (ETR) in firms' financial statements as a distinct disclosure choice. Applying a game-theory disclosure model for voluntary disclosure strategies of firms to a tax setting, we argue that firms face a trade-off in their ETR disclosure decisions. On the one hand, firms have an incentive to enhance their ETR disclosure when the ratio offers shareholders "favourable conditions", for example in terms of higher expected after-tax cash-flows. On the other hand, the disclosure of a favourable low ETR could attract the attention of tax auditors and the public and ultimately result in disclosure costs. We empirically test disclosure behaviour by examining the relation between disclosure visibility and different ETR conditions that reflect different stakeholder-specific costs and benefits. While we find that unfavourable ETR conditions are not highlighted, we observe higher disclosure visibility for favourable ETRs (smooth, close to the industry average, decreasing). Additional analyses reveal that this high visibility is characteristic of firm-years with only moderately decreasing ETRs at usual ETR levels, while extreme ETRs are not highlighted. Interestingly and in contrast to our main results, a subsample of family firms do not seem to highlight favourable ETRs.
    Keywords: Effective tax rate,Cost-benefit trade-off,Disclosure decision,Reputational costs,Tax disclosure
    Date: 2020
  10. By: Rodríguez, Alberto Alejandro
    Abstract: Este libro reúne ensayos y ponencias presentados ante congresos y jornadas como así también algunos trabajos preparados para el dictado de clases de Contabilidad. Se desarrollan temas básicos de la disciplina, tales como el concepto de Contabilidad, elementos del patrimonio, ecuación patrimonial, cuenta y registración contable, y otros más complejos como el estudio de las normas contables y el tratamiento en particular de inversiones, contingencias, resultados y aspectos para entes pequeños y medianos (PYMES). Asimismo se estudia el tratamiento contable de grupos económicos y estados consolidados, abordando la temática desde un aspecto doctrinario y normativo tanto nacional como internacional. Desde el punto de vista normativo, se incluyen los más recientes cambios en normas contables profesionales argentinas (NCPA) y Normas Internacionales de Información Financiera (NIIF) incluyendo en determinados capítulos, referencias a temas en estudio por el Internatinal Accounting Standards Borrad (IASB) y a normas estadounidenses USGAAP.
    Keywords: Contabilidad; Normas Contables; Inversiones; Contingencias;
    Date: 2020
  11. By: Gulati, Rachita; Kattumuri, Ruth; Kumar, Sunil
    Abstract: This paper presents a methodological framework for constructing a non-parametric index of corporate governance for banks. The index is constructed by aggregating six distinct dimensional indices capturing different dimensions of corporate governance, namely board effectiveness, audit function, risk management, remuneration, shareholder rights and information, and disclosure and transparency. For aggregation, a tailored version of data envelopment analysis (DEA) approach which is popularly known as constrained ‘Benefit-of-the-Doubt (BoD)’ model is employed. This approach is unique and distinctive in the sense that it requires no a priori knowledge of weights, and assigns endogenous weights obtained from actual data to individual dimensions of bank governance in order to construct a composite index of corporate governance. This methodological framework has illustrated by applying it for a data set of 40 Indian banks operating in the year 2017. The data set has been compiled using 58 governance regulations as defined by relevant jurisdictions.
    Keywords: corporate governance index; data envelopment analysis; benefit-of-the-doubt model; Indian banks; composite indicators
    JEL: G21 G30 G38
    Date: 2020–06–01

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