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on Accounting and Auditing |
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Issue of 2021‒10‒04
fourteen papers chosen by |
| By: | Eberhartinger, Eva; Safaei, Reyhaneh; Sureth, Caren; Wu, Yuchen |
| Abstract: | This study examines the relation between risk-based tax audit strategies and corporate tax avoidance. We exploit OECD data across 54 countries on risk profiling, predictive modeling, and internal intelligence functions in tax administrations from 2014 to 2017 to investigate whether risk-based tax audits have an incremental effect on tax avoidance beyond enforcement. Our results suggest that the use of risk-based tax audits is associated with lower tax avoidance when controlling for tax enforcement, firm-specific, and country-specific factors. Cross-sectional tests indicate that risk-based tax audit strategies are effective tools to curb tax avoidance across firms of all sizes. The results of additional cross-sectional analyses indicate that risk-based tax audits are more effective in countries with low governance quality, high GDP, and low trust in governments. In additional tests, we use country-level data on tax administration performance and find evidence that countries with a risk-based audit strategy have lower costs of tax enforcement and improve the performance of tax authorities. Overall, our findings indicate that risk-based tax audit strategies have an incremental effect on attenuating firms' tax avoidance and increasing tax revenue. |
| Keywords: | tax audits,tax avoidance,tax compliance,tax enforcement,tax risk |
| JEL: | H25 H26 M41 M42 M48 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:arqudp:267&r= |
| By: | Roth, Steve |
| Abstract: | This paper highlights and unpacks a little-known reality about the Financial Accounts of the United States: the Flows matrix on page 1 of the Federal Reserve’s quarterly Z.1 report does not explain period-to-period changes in the Levels matrix on page 3. The same is true of the sectoral Flow and Levels tables underlying those matrixes. Nor do those tables provide balance-sheet-complete accounting of household or national wealth accumulation. Measures of net saving/investment/capital formation and accumulation, and national wealth accumulation, diverge by tens of trillions of dollars. The discrepancy is explained and resolved by assembling a balance-sheet-complete empirical derivation of comprehensive U.S. “Haig-Simons” income, based on the Integrated Macroeconomic Accounts. The comprehensive measure is 23% higher than national accounts’ “primary” income. Relationships to the Piketty/Saez/Zucman Distributional National Accounts (DINAs) are discussed, along with implications for economic theory and empirical modeling, both mainstream and heterodox/Post-Keynesian. |
| Keywords: | wealth; flow of funds; capital; accumulation; integrated macroeconomic accounts; IMAs; income; gains; holding gains; capital gains; haig-simons |
| JEL: | B4 B5 E21 E22 E25 |
| Date: | 2021–05 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:109976&r= |
| By: | Juliane Beganau; Saki Bigio; Jeremy Majerovitz; Matias Vieyra |
| Abstract: | We document five facts about banks: (1) market and book leverage diverged during the 2008 crisis, (2) Tobin's Q predicts future profitability, (3) neither book nor market leverage appears constrained, (4) banks maintain a market-leverage target that is reached slowly, and (5) pre-crisis, leverage was predominantly adjusted by liquidating assets. After the crisis, the adjustment shifted towards retaining earnings. We present a Q-theory where notions of leverage differ because book accounting is slow to acknowledge loan losses. We estimate the model and show that it reproduces the facts. We examine counterfactuals where different accounting rules produce novel policy tradeoffs. |
| Keywords: | Coronavirus disease (COVID-19); Domestic demand and components; Payment clearing and settlement systems; Recent economic and financial developments |
| JEL: | E44 G21 G33 |
| Date: | 2021–09 |
| URL: | http://d.repec.org/n?u=RePEc:bca:bocawp:21-44&r= |
| By: | Maximiliano Lauletta (Department of Economics, University of California, Berkeley); Martín Rossi (Department of Economics, Universidad de San Andres); Christian Ruzzier (Department of Economics, Universidad de San Andres) |
| Abstract: | Audits can reduce corruption, but corrupt officials may be able to substitute to alternate forms of corruption when the anticorruption policy controls only certain types of corruption. By exploiting the random assignment of municipalities to a large, successful, audit program in Brazil, we document unintended (and undesirable) consequences of such selective anticorruption monitoring: audited municipalities employ more labor in water provision, and this translates into a more inefficient service. We also provide additional evidence consistent with the idea that local officials may be using their discretion in hiring to substitute between different forms of corruption. |
| Keywords: | corruption, audits, efficiency, development, employment, water & sanitation |
| JEL: | D73 D78 H42 K42 L95 |
| Date: | 2021–09 |
| URL: | http://d.repec.org/n?u=RePEc:sad:wpaper:157&r= |
| By: | Alessandro Ferracci; Giulio Cimini |
| Abstract: | We study the difference between the level of systemic risk that is empirically measured on an interbank network and the risk that can be deduced from the balance sheets composition of the participating banks. Using generalised DebtRank dynamics, we measure observed systemic risk on e-MID network data (augmented by BankFocus information) and compare it with the expected systemic of a null model network, obtained through an appropriate maximum-entropy approach constraining relevant balance sheet variables. We show that the aggregate levels of observed and expected systemic risks are usually compatible but differ significantly during turbulent times (in our case, after the default of Lehman Brothers and the VLTRO implementation by the ECB). At the individual level instead, banks are typically more or less risky than what their balance sheet prescribes due to their position in the network. Our results confirm on one hand that balance sheet information used within a proper maximum-entropy network models provides good systemic risk estimates, and on the other hand the importance of knowing the empirical details of the network for conducting precise stress tests of individual banks, especially after systemic events. |
| Date: | 2021–09 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2109.14360&r= |
| By: | Rui Pedro Gonçalves Brito (University of Coimbra, Centre for Business and Economics Research, CeBER and Faculty of Economic); Pedro Maria Corte Real Alarcão Judice (ISCTE Business Research Unit) |
| Abstract: | In this paper, we devise a forward-looking methodology to determine efficient credit portfolios under the IFRS 9 framework. We define and implement a credit loss model based on prospective point-in-time probabilities of default. We determine these probabilities of default and the credits’ stage allocation through a credit stochastic simulation. This simulation is based on the estimation of transition matrices. Using data from 1981 to 2019, in a non-homogeneous Markov chain setting, we estimate transition matrices conditional on the global real gross domestic product growth. This allows considering the effects of the economic cycle, which are of great importance in bank management. Finally, we develop a robust optimization model that allows the bank manager to analyze the tradeoff between the annual average portfolio income and the corresponding portfolio volatility. According to the proposed bi-objective model, we compute the efficient credit portfolios constructed based on 10-year maturity credits. We compare their structure to those generated by the IAS 39 and CECL accounting frameworks. The results indicate that the IFRS 9 and CECL frameworks generate efficient credit portfolios whose structure penalizes riskier-rated credits. In turn, the riskier efficient credit portfolios under the IAS 39 framework concentrate entirely on speculative-grade credits. This pattern is also encountered in efficient credit portfolios constructed based on credits with different maturities, namely 5 and 15 years. Moreover, the longer the maturity of the credits that enter into the composition of the efficient portfolios, the more the speculative-grade credits tend to be penalized. |
| Keywords: | IFRS 9, IAS 39, CECL, credit risk, transition matrices,stochastic simulation. |
| JEL: | C44 C50 C61 C63 G11 G17 G24 |
| Date: | 2021–07 |
| URL: | http://d.repec.org/n?u=RePEc:gmf:papers:2021-07&r= |
| By: | International Monetary Fund |
| Abstract: | Selected Issues |
| Keywords: | D. tax incentives; tax incentives in Tajikistan; C. SOE reform effort; Tajikistan's tax incentives; staff team of the International Monetary Fund; Tax incentives; Corporate income tax; Fiscal risks; Public enterprises; Central Asia; Caribbean |
| Date: | 2021–09–03 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:2021/201&r= |
| By: | Thor O. Thoresen; Marius A. K. Ring; Odd E. Nygård; Jon Epland (Statistics Norway) |
| Abstract: | Over the past decade, the question of whether and how to tax household wealth has risen to the forefront of policy debates across the world. Norway belongs to only a handful of countries that (still) levy an annual net wealth tax. We exploit rich Norwegian administrative data to perform descriptive analyses that address questions at the focal point of the wealth tax debate. We discuss how the taxation of wealth fits in with the personal income tax. We further investigate the redistributional effects of wealth taxation and explore the extent to which wealth taxation may cause adverse liquidity effects for private firms. Finally, we consider the effects of wealth taxation on charitable giving. Taken together, we see the evidence presented here as not weakening the case for upholding the tax: we find favorable distributional effects and the efficiency losses appear to be limited. |
| Keywords: | Wealth tax; administrative data; distributional effects; efficiency loss |
| JEL: | H21 H23 H25 H31 |
| Date: | 2021–08 |
| URL: | http://d.repec.org/n?u=RePEc:ssb:dispap:960&r= |
| By: | Peña, Guillermo |
| Abstract: | Optimality of consumption taxes as VAT can be conditioned by the reduction of working time respect to leisure. Nonetheless, may we tax a good or service complementary to leisure? In this case, by applying the tax, the good itself would be discouraged, but also leisure at the same time. This paper theoretically discusses and analyzes the potential complementarity or neutrality of financial services regarding leisure time. A reduced general equilibrium model is developed, suggesting their complementarity. This is confirmed in the empirical section, where data from 30 OECD countries for 2018 is employed, obtaining that some financial indicators are usually complements of leisure, specifically for women, who are also sensitive in their leisure time to other fiscal and commercial variables. This show that the elimination of the exemption of financial services under VAT may discourage leisure hours, offsetting the discouragement of working hours by the general VAT. |
| Keywords: | Leisure time, financial services, complementarity, financial VAT, optimal taxation |
| JEL: | G21 H21 H25 J22 |
| Date: | 2021–09–27 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:109942&r= |
| By: | Torrregrosa Hetland, Sara (Department of Economic History, Lund University); Sabaté, Oriol (Department of Economic History, University of Barcelona) |
| Abstract: | This paper studies the developments in the income taxes of Sweden, the United Kingdom, and the United States during the first half of the twentieth century. We present the evolution of marginal and average effective tax rates, number of taxpayers, and income tax due over the whole income distribution, and calculate the corresponding indices of progressivity and redistribution. Our results show that redistribution through the income tax increased during the period, but with varying intensity and mechanisms. During World War I this was a joint effect of increases in the amount of revenue collected (average effective tax rate) and progressivity, whereas during World War II revenue increased again but progressivity diminished, as the tax incorporated more low- and middle-income taxpayers. The income tax in the United Kingdom was always the most redistributive of the three, and after 1945 also the one that remained most progressive. |
| Keywords: | taxation; redistribution; progressivity; income tax; world wars |
| JEL: | H23 H24 N42 N44 |
| Date: | 2021–06–30 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:luekhi:0224&r= |
| By: | Balluchi, Federica; Lazzini, Arianna; Torelli, Riccardo |
| Abstract: | The aim of this research is to investigate the contribution of Giuseppe Verdi and Casa Ricordi in shaping the 19th century music culture industry by adopting a new perspective on accounting and history. In 19th century Italy, opera represented an important phenomenon, both artistically and socially, playing a fundamental role of intermediary between society and the political sphere. The complex relationships between the composer (artist) and the publisher (cultural intermediary) are analysed in the specific field of opera music, outlining the evolution and interweaving of artistic, social, and economic aspects. The study embraces the period 1839–1893 and examines the economic and private relations between Giuseppe Verdi and Casa Ricordi and their impacts on the culture industry to this day. This paper’s novelty is to adopt a historical perspective to broaden accounting into the field of high music offering possibilities for further studies. |
| Date: | 2021–08–03 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:5hz87&r= |
| By: | Torrregrosa Hetland, Sara (Department of Economic History, Lund University); Sabaté, Oriol (Department of Economic History, University of Barcelona) |
| Abstract: | This document presents the methodological approach used in two papers about historical income taxes: “Income taxes and redistribution in the early twentieth century” (Torregrosa-Hetland and Sabaté, 2021) and “Income tax progressivity and inflation during the World Wars” (Torregrosa-Hetland and Sabaté, 2019). We first describe the general method and sources used to obtain synthetic distributions of income and calculate the effective income tax rates and the corresponding indices of progressivity and redistribution. Secondly, we discuss the most important country-specific issues that have been taken into account in our calculations. Finally, the third section looks at the accuracy of our synthetic income distributions and tax simulations by comparing them with the original series from the tax statistics. The two aforementioned papers summarize this same information in their methodological sections, but this note goes more in depth into some details that might be of interest to some readers. |
| Keywords: | taxation; redistribution; progressivity; income tax; world wars |
| JEL: | H23 H24 N42 N44 |
| Date: | 2021–06–30 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:luekhi:0223&r= |
| By: | pablo Marmissolle (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía); Henry Willebald (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía) |
| Abstract: | We present estimates of the gross value added of the public administration in Uruguay, in current and constant prices, for the period 1870 - 1955. Our estimations, based on previous efforts to estimate the value added of the sector, allow us to correct the previous series and, based on these corrections, open the possibility of adjusting the Gross Domestic Product series for the period before the national accounts system. Splicing the estimated historical series with the official series from 1955 to the present, continuous series were obtained that cover the period 1870 - 2017. These series are made available to the research community for its consideration, criticism and review. |
| Keywords: | public administration, national accounts, Uruguay |
| JEL: | E01 H11 N46 |
| Date: | 2021–09 |
| URL: | http://d.repec.org/n?u=RePEc:ulr:wpaper:dt-20-21&r= |
| By: | International Monetary Fund |
| Abstract: | Tajikistan successfully completed a 3-year ECF-supported program in May 2012 and needs to continue with ambitious reforms. While growth is robust, it is non-inclusive, leading to large-scale outmigration that makes Tajikistan the most remittance-dependent country in the world. The country remains the poorest of the eight in the Caucasus and Central Asia (CCA) and stands next to last among the seven with rankings in the ease of doing business. Reliance on commodity imports, a narrow export base, and low buffers leave the economy vulnerable. Weak macroeconomic policy frameworks restrict the authorities’ ability to dampen shocks. State-directed lending and investment displace market-financed activity and create fiscal risks. Presidential elections are scheduled for November. |
| Keywords: | burden indicator; NBT reform action plan; flows shock; creating flow; headline inflation; NBT website; IMF's transparency policy; NBT internal audit; policy discussion; NBT Law; fund request; remittance inflow; Debt sustainability analysis; Monetary statistics; Global; Central Asia and the Caucasus |
| Date: | 2021–09–03 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:2021/195&r= |