nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2021‒02‒22
seven papers chosen by

  1. The Banker's Oath And Financial Advice By Utz Weitzel; Michael Kirchler
  2. Does Intangible Asset Intensity Increase Profit-Shifting Opportunities of Multinationals? By Roberto Crotti; ;
  4. The Balance Sheet of the Exchange Stabilization Fund, 1934-2019 By Sheng, Jiemin
  5. The Transmission of Monetary Policy via the Banks' Balance Sheet - Does Bank Size Matter? By Tumisang Loate; Nicola Viegi
  6. Does Additional Mandatory Reporting Alter Charity or Donor Behavior?---Examining the 2006 Pension Protection Act By Jonathan Oxley
  7. Auto-Enrollment Retirement Plans for the People: Choices and Outcomes in OregonSaves By John Chalmers; Olivia S. Mitchell; Jonathan Reuter; Mingli Zhong

  1. By: Utz Weitzel; Michael Kirchler
    Abstract: Financial misbehavior is widespread and costly. The Dutch government legally requires every employee in the financial sector to take a Hippocratic oath, the so-called "banker's oath." We investigate whether moral nudges that directly and indirectly remind financial advisers of their oath affect their service. In a large-scale audit study, professional auditors confronted 201 Dutch financial advisers with a conflict of interest. We find that when auditors apply a moral nudge, referring to the banker's oath, advisers are less likely to prioritize bank's interests. In additional prediction tasks, we find that Dutch regulators expect stronger effects of the oath than observed.
    Keywords: experimental finance, audit study, banker?s oath, moral nudges, financial advice
    JEL: C92 D84 G02 G14
    Date: 2021–04
  2. By: Roberto Crotti (IHEID, Graduate Institute of International and Development Studies, Geneva); ;
    Abstract: This paper studies how intangible asset intensity affects multinationals' profitshifting behavior. Intangible assets reduce the cost of booking profits in low-tax jurisdictions, independently from where profits are generated. Consequently they can be instrumental to implementing tax-avoidance schemes. Using a large firm-level, parent-subsidiaries matched panel data set I test if multinationals characterized by high intangible asset intensity report higher profits in low-tax jurisdictions, respect to corporations with low intangible asset intensity. I find that, intangible asset intensity exacerbates multinationals' profit-shifting behavior. Splitting the sample between tech and non-tech companies, I find that, although tech companies leverage intangible asset intensity for profit-shifting more than the rest of the sample, there is no statistical difference between profit-shifting of tech companies with high intangibles intensity and non-tech companies with high intangibles intensity.
    Keywords: intangible assets, international profit-shifting, corporate taxation
    JEL: F23 H25
    Date: 2021–02–10
  3. By: Kemal Cebeci (Public Finance, Marmara University, Faculty of Economics, Istanbul, Turkey,)
    Abstract: Capital taxes have an important place in the tax policy due to its role on economic growth and other effects. Capital taxes derived from different economic sources or parties such as: income of households, income of corporations, income of self-employed, stock of capital. In EU, related with the goals of the tax policy which can be explained as: equity-efficiency, capital taxation can be varied in different countries. For EU transition economies, economic growth may become preferential goal of the tax policy related with the relatively low level of GDP in contrast with EU15. So, EU transition economies may apply tax policy in favor of capital. In this study, we investigated our assumption: capital can be taxed at a lower level in EU11 economies compared to EU15 countries for encouraging capital†. Tax statistics of Eurostat on capital taxation for several indicators were used for the period of 2008-2018. Our statistical analysis and findings partially show that capital is taxed relatively low in EU transition economies and tax burden on capital has decreased more than EU15 in the period of 2008-2018.
    Keywords: Capital taxation, transition economies, tax policy, growth.
    JEL: H20 H21 H30 O40
    Date: 2020–12
  4. By: Sheng, Jiemin (The Johns Hopkins Institute for Applied Economics, Global Health, and the Study of Business Enterprise)
    Abstract: In this paper, the author explores the balance sheet of the Exchange Stabilization Fund (ESF) over its first 85 years as a lens though which to analyze the fund. An accompanying spreadsheet workbook provides data from the annual balance sheet of the ESF since the fund’s inception in 1934. These data are available in electronic form for the first time, which will be of interest to those wishing to do quantitative analyses of its role in U.S. monetary policy.
    Keywords: Exchange Stabilization Fund (ESF); balance sheet; assets; liabilities; gold; foreign exchange intervention
    JEL: E52 E59 N12
    Date: 2021–02
  5. By: Tumisang Loate (Department of Economics, University of Pretoria); Nicola Viegi (SARB Chair in Monetary Economics, Department of Economics, University of Pretoria)
    Abstract: We study the credit channel of monetary policy in South Africa between 2002 and 2019 using banks' balance sheets. We show that there is a significant heterogeneity within the banking sector in both the loan and deposit sides of the banks' balance sheets. In response to a contractionary monetary policy shock, big banks adjust their loan portfolio by lending to businesses and reducing lending to households whereas for small banks we find the opposite. The increase in corporate lending amid declining inventories is consistent with the hypothesis of ``hedging and safeguarding the capital adequacy ratio" rather than funding business inventories. This paper highlights the importance of heterogeneity in customers, market power and business models in the banking sector, which characterises the socio-demographics dynamics in South Africa.
    Keywords: Credit channel, banks balance sheets, monetary policy
    JEL: E32 E52 G21
    Date: 2021–01
  6. By: Jonathan Oxley (Department of Economics, Florida State University)
    Abstract: Financial disclosure requirements are common accountability measures placed on publicly funded organizations. However, the impact of financial disclosure requirements on organizational structure or on financial contributors' behavior is not well understood in the context of nonprofit organizations. I explore this question by analyzing mandatory Form 990-T disclosure included in the Pension Protection Act. This contributes to the understanding of organizational and financial contributor response to mandatory disclosure in an environment already requiring operation data disclosure. I use a difference-in-differences approach, comparing organizations filing a Form 990-T at least once in the three years prior to passage to those who did not. I find that one in four filing organizations create a subsidiary in the following two filing years. Subsidiary tax filings are not subject to disclosure, indicating that nonprofits can restructure their organizations in a manner allowing them to circumvent disclosure requirements. While charities alter their organizational structure, I find no evidence of net changes in donor behavior towards charities, as aggregate total contributions and government grants received do not change.
    Keywords: Financial Disclosure, Charitable Organizations, Form 990-T, Taxable Subsidiaries
    JEL: D12 D22 D64 G38 H80 L30 M48
    Date: 2021–01
  7. By: John Chalmers; Olivia S. Mitchell; Jonathan Reuter; Mingli Zhong
    Abstract: Oregon recently launched an automatic-enrollment retirement savings program for private sector workers lacking access to other workplace retirement plans. We analyze participation choices, account balances, and inflow/outflow data using administrative records between August 2018 and April 2020. Within the small to mid-sized firms served by OregonSaves, estimated average after-tax earnings are low ($2,365 per month) and turnover rates are high (38.2% per year). Younger employees and employees in larger firms are less likely to opt out, but participation rates fall over time. The most common reason given for opting out is “I can’t afford to save at this time,” but the second most common is “I have my own retirement plan.” As of April 2020, 67,731 accounts had positive account balances, holding $51.1 million in total assets. The average balance is $754, but with considerable dispersion; younger workers accumulating the fewest assets due to higher job turnover. Overall, we conclude that OregonSaves has meaningfully increased employee savings by reducing search costs. The 34.3% of workers with positive account balances in April 2020 is comparable to the marginal increase in participation at larger firms in the private sector. Employees opting out of OregonSaves are often doing so for rational reasons.
    JEL: D14 G5 J26 J32
    Date: 2021–02

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NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.