nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2020‒12‒14
seven papers chosen by

  1. On the determinants and effects of corporate tax transparency: Review of an emerging literature By Müller, Raphael; Spengel, Christoph; Vay, Heiko
  2. The role of external audits in enhancing transparency and accountability for the Sustainable Development Goals By Aránzazu Guillán Montero; David Le Blanc
  3. A Return to Operating with Abundant Reserves By Lorie Logan
  4. U.S. Households' Balance Sheet and the link to economic policies By De Koning, Kees
  5. Disclosure and publication of information on the governance and ownership of joint-stock corporations in Europe (19th-early 20th centuries) By Poukens, Johan
  6. Re-examining Non-Current Asset Impairment Timeliness in Japan By Keishi Fujiyama
  7. Sovereign Capital, External Balance, and the Investment-Based Balassa-Samuelson Effect in a Global Dynamic Equilibrium By Alexis Derviz

  1. By: Müller, Raphael; Spengel, Christoph; Vay, Heiko
    Abstract: In response to discussions about large multinational enterprises' tax planning activities, legislators around the world have adopted numerous regulations to increase corporate tax transparency. New settings and datasets have spurred empirical research in recent years. Our paper presents a review of this emerging literature on corporate tax transparency. To this end, we first propose a framework to structure the diverse landscape of tax-related disclosures. Second, we elaborate on the conceptual underpinnings of tax transparency by drawing on established theories from financial accounting and CSR reporting research. Third, we survey empirical evidence on corporate tax transparency. We classify the findings into (i) determinants of firms' tax disclosure decisions, (ii) informativeness of different kinds of tax-related disclosure, and (iii) effects of increased tax transparency on firms and their stakeholders. Finally, we synthesize the main inferences and offer suggestions for future research.
    Keywords: tax transparency,tax disclosure,tax planning,literature review
    JEL: F23 G38 H25 H26 M14 M41
    Date: 2020
  2. By: Aránzazu Guillán Montero; David Le Blanc
    Abstract: This paper examines the involvement of supreme audit institutions (SAIs) in auditing the preparedness of governments for implementing the Sustainable Development Goals (SDGs) since 2015. These audits have covered institutional arrangements put in place to implement the SDGs, the mobilization of resources, and monitoring and evaluation frameworks. SDG preparedness audits have produced valuable information that is not necessarily available from other national processes linked with SDG follow-up and review. As such, audit recommendations can be a powerful tool to help governments improve SDG implementation. The paper reflects on the impact that SDG audits have made, and on the challenges and opportunities for SAIs that have engaged in this exercise. While many of these challenges are generic to the work of SAIs, SDG audits also present specific political, institutional and technical problems. Finally, the paper explores questions that this new area of engagement poses for SAIs, including the long-term prospects for institutionalization of SDG audits and the relationship with other accountability mechanisms for the SDGs at the national level.
    Keywords: Sustainable development goals; sustainable development; government accountabi­lity; supreme audit institutions
    JEL: F55 H83 O19 O20
    Date: 2019–01
  3. By: Lorie Logan
    Abstract: Remarks before the Money Marketeers of New York University (delivered via videoconference).
    Keywords: reserves; Federal Reserve; banks; market; balances; Treasury General Account (TGA); pandemic; COVID-19; balance sheet; reserve balance; interest paid on excess reserves (IOER); money market rates; foreign banking organizations (FBOs)
    Date: 2020–12–01
  4. By: De Koning, Kees
    Abstract: In the financial accounts as collected by the U.S. Federal Reserve, one Balance Sheet item stands out: “The Household Balance Sheet over the period 2000-2020”. In Q4 2005, the market value of households’ real estate assets was $14.416 trillion. By Q4 2011 the market value had dropped to $8.319 trillion: a loss of $6.1 trillion over five years or a loss of 42.2% over the same period. For all households it took to Q2 2016 before the loss had been recovered when the market value reached $14.488 trillion. This reflects an adjustment period of over 10 years! The U.S. Federal government tax receipts over the three-year period 2009, 2010 and 2011 totaled $6.573 trillion. Even the government borrowings over these three years together amounted to a smaller sum of $4.169 trillion. The loss on households’ real estate between Q4 2005 and Q4 2011 was equal to 93% of all U.S. government tax receipts, not just for one year, but over three years! Whilst the Great Recession of 2008-2012 wreaked havoc with U.S. government budgets, but more important was the damage inflicted on households’ economies over these years and beyond. To counter the 2008 recession, two of the instruments used were the Quantitative Easing (“Q.E.”) program by the Federal Reserve and the deficit financing by the U.S. Federal Government. The Q.E. program focused on buying up U.S. government debt and mortgage-backed securities paper issued by the state sponsored financial institutions, such as Fannie Mae and Freddy Mac. Interest rates were kept at historical lows. The U.S. government debt to GDP level did rise from 62% in 2007 to 135.6% of GDP as per Q2 2020.The four Q.E. programs have pumped in just over $6 trillion into the U.S. economy as per the latest figures. The current coronavirus crisis can be expected to bring with it a substantial rise in unemployment levels, significant company failures and a greater reluctance by banks to lend to those most in need. Further increasing U.S. government debt levels might not be an attractive option. More Q.E. directed to funding existing debt levels also has its limits. One solution that has not been tried is to use Q.E. to help households directly in releasing some home equity on a temporary basis. Funding savings rather than debts could be more effective. A new type of Q.E. will be set out in this paper.
    Keywords: U.S. households' balance sheet; Home mortgage levels by income group; Government debt levels. Quantitative Easing and an improved Q.E. method.
    JEL: D1 D12 D14 D4 D5 D53 D57 E1 E2 E21 E24
    Date: 2020–11–20
  5. By: Poukens, Johan
    Abstract: Corporate law increasingly paid attention to the disclosure and publication of information on the governance and ownership of joint-stock corporations. This paper on the one hand gives an overview of mandatory disclosure and publication requirements for joint-stock companies in the corporate legislation of Belgium, France, Germany, the Netherlands, Spain and the United Kingdom from the beginning of the nineteenth century until the interwar period. We argue that changes over time were consequence of a new approach to investor protection which coincided with transition to a concessionary regime to general incorporation and that differences between countries with different legal traditions were minimal. On the other hand, references to official publications which contained constitutional documents and information on governance and ownership are provided in an appendix.
    JEL: N01 N43 N44
    Date: 2020
  6. By: Keishi Fujiyama (Research Institute for Economics and Business Administration, Kobe University, Japan)
    Abstract: This study re-examines the timeliness of non-current asset impairments reported by Japanese firms. While prior research employs linear stock returns as a proxy for economic losses, this study uses piecewise-linear stock returns separating positive and negative stock returns. It also examines the relationships of non-current asset impairments with changes in sales and cash flows from operations, which can be viewed as short-term indicators of economic impairments. I find a negative relationship between non-current asset impairments and negative stock returns in year t–5, consistent with prior research. I also find such a relationship in year t, contrary to prior research. The results indicate that the relationships are stronger in years t–1 and t–2 than in years t and t–3. These results suggest that non-current asset impairment losses reported by Japanese firms are consistent with the Japanese accounting standard, while those losses are not necessarily reported in a timely manner. In addition, I find evidence suggesting that changes in sales and cash flows from operations in year t are short-term indicators of non-current asset impairments.
    Date: 2020–11
  7. By: Alexis Derviz
    Abstract: We develop a two-country dynamic optimization model with investment and labor mobility and calculate its full-distribution Markov solution without relying on non-stochastic steady-state shortcuts. Agents have access to so-called sovereign capital (an extension of the inside equity notion) as well as the usual outside equity in their own country, but only to outside equity in the other country. This friction creates two distinct categories of partially non-tradable investment goods. Their price ratio can be viewed as an analogue of the real exchange rate in the Balassa-Samuelson model, but with consumption goods replaced by assets. In equilibrium, this asset-based real exchange rate is more sensitive to the stock ownership split between residents and non-residents in each country's production capacity than to the ratio of national physical capital stocks. In a similar model without sovereign capital exclusivity, the order of the sensitivity is reversed. Along with the real exchange rate, we also analyze equilibrium net investment positions and financial account levels as functions of the physical capital ratio and the stock ownership splits. This allows us, in the dynamic equilibrium environment modeled, to point at the underlying regularities behind the seemingly irregular interplay between the external balance and the exchange rate.
    Keywords: Capital, dynamic optimization, real exchange rate, sovereignty, tradability
    JEL: C61 C63 F36 F41 F65
    Date: 2020–11

General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.