nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2021‒06‒21
five papers chosen by
Alexander Harin
Modern University for the Humanities

  1. Winmail3: An automated email package with an application to correspondence audit tests By Luca Fumarco; S. Michael Gaddis; Iain Snoddy
  2. Factors Affecting Detection of Manipulation in Financial Statements: An Empirical Study from Auditors’ Perspective By Mahami, Zouleykha; Mouloudj, Kamel
  3. The Determinants of Investment in Tangible Fixed Capital in Japan: Evidence from Firm Level (Japanese) By FUKAO Kyoji; KIM YoungGak; KWON Hyeog Ug; IKEUCHI Kenta
  4. Innovation for Tax Avoidance: Product Differentiation and the Arm's Length Principle By OKOSHI Hirofumi
  5. Declining Capital Formation in Japan and the Role of Intangibles—Empirical Studies using Industry-level Data (Japanese) By MIYAGAWA Tsutomu; ISHIKAWA Takayuki

  1. By: Luca Fumarco (Tulane University); S. Michael Gaddis (University of California, Los Angeles); Iain Snoddy (Analysis Group)
    Abstract: Correspondence audits are a popular method to examine discrimination in a causal framework. However, correspondence audits often require sending hundreds or thousands of emails to subjects. The Winmail3 package allows users to automatically send emails with Stata through PowerShell, which is open-source and cross-platform. Researchers can use this package to perform basic email tasks, such as contacting students or colleagues with standardized messages. Additionally, researchers can perform more complex tasks that entail sending randomized messages with multiple attachments from multiple accounts, tasks that are often necessary to conduct correspondence audit tests. This paper introduces the command and illustrates multiple examples of its application. We believe that researchers can apply this package to correspondence audit tests to save time and money.
    Keywords: correspondence audit tests, field experiments, automation, PowerShell, email
    JEL: C8 C93
    Date: 2021–06
  2. By: Mahami, Zouleykha; Mouloudj, Kamel
    Abstract: This study examines whether independence of external auditor, auditor industry specialization and ethical commitment of external auditor, improves the ability to detect manipulation in Financial Statements. Using a 25-item questionnaire and convenience sampling method, the data were collected from 76 auditors. The results show that the auditor industry specialization and ethical commitment of auditor have a significant positive impact on detect manipulation in Financial Statements. While independence of auditor not significantly affecting detect manipulation.
    Keywords: Independence; Ethics of auditor; Auditor Specialization; Manipulation; Financial Statements.
    JEL: M41 M42 M48 M49
    Date: 2020–06–09
  3. By: FUKAO Kyoji; KIM YoungGak; KWON Hyeog Ug; IKEUCHI Kenta
    Abstract: This paper empirically analyzed the determinants of the investment in tangible fixed capital by Japanese firms after the global financial crisis in 2008, using the micro data of "the Basic Survey of Japanese Business Structure and Activities". With regard to the investment of Japanese firms since the global financial crisis, many previous studies have investigated why investment is sluggish despite increased profits. It has been argued that causes of the stagnation of investment are the slowdown of TFP growth, the use of internal funds on R&D, unmeasured investment on the intangible assets, FDI, M&A, etc., and increasing internal reserves as a precautionary motive. In this paper, we examine these arguments by estimating the investment function of Japanese firms. The main results are as follows. 1) firms with higher TFP increased investment, 2) M&A and investment in software are complementary with investment in tangible fixed capital, and 3) increased cash flow increased fixed investment.
    Date: 2021–03
  4. By: OKOSHI Hirofumi
    Abstract: Product differentiation both enhances consumer utility and firm profits but at the same time makes it difficult for tax authorities to audit MNE tax avoidance strategies, as the arm's length principle is difficult to apply. This paper incorporates these positive and negative aspects of product differentiation and studies the interrelation between profit shifting and product differentiation. The model shows that MNEs engage in more investment in product differentiation in the presence of profit shifting opportunities, and that globalization accelerates the investment. The model also shows that globalization can improve welfare in a non-tax haven.
    Date: 2021–05
  5. By: MIYAGAWA Tsutomu; ISHIKAWA Takayuki
    Abstract: Growth accounting using the JIP database tells us that the contribution of capital accumulation to economic growth in the first half of 2010s is very small. As Gutierrez and Philippon (2017) and Crouzet and Eberly (2018) point out, declining capital formation led to secular stagnation in advanced economies in the 2010s. Following their arguments based on Tobin's q theory with multiple capital goods, we examine whether the declining capital formation in tangibles is covered by the increasing capital formation in intangibles. Our study shows that capital formation in intangibles in Japan explains three-fourths of the investment gap between capital formation estimated by Tobin's q theory with multiple capital and real tangible investment. Although our study shows that capital formation in intangibles complements the declining capital formation in tangible assets, its complementary role is insufficient. We recommend that the government support capital formation in intangibles.
    Date: 2021–04

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