nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2023‒05‒22
eight papers chosen by

  2. Audit, innovation et nouvelles technologies : vers l’audit augmenté avec la RPA ? État de l'art - Volume 2 (Mars 2023) By Nabyla Daidj; Cyril Bordeaux; Jérémy Neyrial
  3. IPOs and Corporate Tax Planning By Dobridge, Christine L.; Lester, Rebecca; Whitten, Andrew
  4. Trends in Corporate Economic Profits and Tax Payments, 1998 to 2017 By Congressional Budget Office
  5. Self-Employment Income Reporting on Surveys By Christian Imboden; John Voorheis; Caroline Weber
  6. MULTIBILLION-DOLLAR TAX QUESTIONS By James Alm; Jay A. Soled; Kathleen DeLaney Thomas
  7. Income Inequality and the Accounting Period in New Zealand: Evidence from Administrative Data By Alinaghi, Nazila; Creedy, John; Gemmell, Norman
  8. Downward Revision of Investment Decisions after Corporate Tax Hikes By Link, Sebastian; Menkhoff, Manuel; Peichl, Andreas; Schüle, Paul

  1. By: Timo Goeschl; Marcel Oestreich; Alice Soldà (-)
    Abstract: How to design audit mechanisms that harness the benefits of self-reporting for achieving compliance with regulatory targets while limiting misreporting is a pressing question in many regulatory contexts, from climate policies to public health. Contrasting random audit and competitive audit mechanisms, this paper theoretically and experimentally studies their performance in regulating socially undesirable emissions when peer information about others’ emissions is present or absent. Our focus is on the compliance of emission levels with regulatory targets, going beyond existing results on truthfulness of reporting. Confirming theoretical predictions, the experiment shows that in contrast to the random audit mechanism, the competitive audit mechanism can leverage peer information for compliance: emission levels are closer to the social optimum. Yet, emission levels fall somewhat short of full compliance. The results highlight the considerable potential of competitive audit mechanisms for achieving not only more truthfulness, but also more compliance.
    Keywords: Regulation; compliance; tournament theory; online experiment
    JEL: D62 H41 H83 L51 Q58
    Date: 2023–05
  2. By: Nabyla Daidj (IMT-BS - TIM - Département Technologies, Information & Management - IMT - Institut Mines-Télécom [Paris] - IMT-BS - Institut Mines-Télécom Business School - IMT - Institut Mines-Télécom [Paris], LITEM - Laboratoire en Innovation, Technologies, Economie et Management (EA 7363) - UEVE - Université d'Évry-Val-d'Essonne - Université Paris-Saclay - IMT-BS - Institut Mines-Télécom Business School - IMT - Institut Mines-Télécom [Paris]); Cyril Bordeaux (Advolis Orfis); Jérémy Neyrial (IMT-BS - Institut Mines-Télécom Business School - IMT - Institut Mines-Télécom [Paris], PwC - PricewaterhouseCoopers)
    Abstract: Ce document est le deuxième d'une série de livres blancs consacrés aux évolutions de l'audit interne et de l'audit IT. Ces livres blancs sont le résultat d'échanges avec nos élèves de la Majeure Audit & Conseil en systèmes d'information (master 2 ACSI) mais aussi de réflexions menées avec un grand nombre de professionnels (cabinets d'audit & conseil, ESN, Grands Comptes etc.) qui interviennent dans les enseignements d'ACSI ( 220x200mm-web.pdf.). Plus largement, ces travaux sont destinés à tous les élèves des formations en systèmes d'information pour le management. La rédaction du premier livre blanc intitulé « Le futur de l'audit IT : quelles évolutions possibles ? » a été publié en avril 2021. Il est accessible et téléchargeable à partir des liens suivants : Après avoir donné quelques éléments de contexte sur l'innovation au sens large et à l'open innovation (chapitre 1), ce deuxième livre blanc est consacré au rôle joué par les nouvelles technologies dans les activités d'audit (chapitre 2) et plus spécifiquement à la place de la RPA (automatisation robotisée des processus). La RPA sera étudiée sous deux angles : - La RPA : une technologie transformant progressivement les activités de l'audit (chapitre 3) - L'audit de la RPA : une pratique nouvelle ? (chapitre 4)
    Date: 2023–03
  3. By: Dobridge, Christine L. (Federal Reserve Board); Lester, Rebecca (Stanford U); Whitten, Andrew (US Department of the Treasury)
    Abstract: Does going public affect the amount and type of corporate tax planning? Using a panel of U.S. corporate tax return data from 1994 to 2018, we show that IPO completion is associated with the implementation of multinational income shifting strategies central to the current international tax policy debate. Specifically, firms (i) expand their foreign tax haven presence, (ii) enter into cross-border agreements that accompany intangible asset transfers to foreign subsidiaries, and (iii) increase their level of foreign related-party payments around the time that they go public. The effects are strongest among firms that switch to more sophisticated tax advisors in the years preceding the IPO. In contrast, we observe little domestic tax planning because large stock option deductions, which increase as a consequence of the IPO, provide large domestic tax shields. The paper contributes to the nascent literature studying IPOs by documenting the types and timing of specific tax strategies that enable public firms to remain lightly taxed in the post-IPO period. Furthermore, the findings imply that U.S. tax policies targeted at early-stage innovative firms are critical for retaining domestically developed IP--and the income earned on such assets--for the U.S. tax base.
    JEL: D12 E21 H24
    Date: 2022–11
  4. By: Congressional Budget Office
    Abstract: Over recent decades, corporate economic profits—that is, profits from current production—have grown faster than the amounts that corporations pay in federal taxes. That pattern, which cannot be explained by changes in statutory tax rates, reflects a divergence between economic profits and the corporate tax base. Because such differences affect how CBO projects revenues from the corporate income tax, the agency has analyzed the relationship between the two measures.
    JEL: E01 H20 H25 H32
    Date: 2023–05–09
  5. By: Christian Imboden; John Voorheis; Caroline Weber
    Abstract: We examine the relation between administrative income data and survey reports for self-employed and wage-earning respondents from 2000 - 2015. The self-employed report 40 percent more wages and self-employment income in the survey than in tax administrative records; this estimate nets out differences between these two sources that are also shared by wage-earners. We provide evidence that differential reporting incentives are an important explanation of the larger self-employed gap by exploiting a well-known artifact – self-employed respondents exhibit substantial bunching at the first EITC kink in their administrative records. We do not observe the same behavior in their survey responses even after accounting for survey measurement concerns.
    Keywords: Income Reporting, Survey Accuracy, Measurement Error, Tax Evasion, Tax Avoidance
    JEL: C83 H24 H26
    Date: 2023–04
  6. By: James Alm (Tulane University); Jay A. Soled (Rutgers Business School); Kathleen DeLaney Thomas (University of North Carolina School of Law)
    Abstract: Tax compliance in the United States historically hovers in the 80 percent range, costing the nation approximately half a trillion dollars annually in uncollected tax revenue. To foster greater tax compliance, the Internal Revenue Service (IRS) should employ whatever tools are at its disposal. Standard deterrence theory argues that increasing the audit rate and imposing stiffer penalties would foster greater tax compliance. There are political headwinds, however, that strongly suggest that these approaches are not currently viable. Instead, there is a low-cost method that could yield greater tax compliance. Drawing on recent and compelling social science research, the IRS should ask more information-revealing questions on tax returns. By engaging in this important exercise of strategic inquiries, dual benefits are likely to emerge: taxpayers would be more likely to report honestly to avoid acts of commission (e.g., lying); and the IRS would be in a better strategic position because it would possess additional, relevant information on taxpayer activities.
    Keywords: Internal Revenue Service, tax compliance, behavioral economics, nudges, act of omission, act of commission
    JEL: H2 H26 D91
    Date: 2023–04
  7. By: Alinaghi, Nazila; Creedy, John; Gemmell, Norman
    Abstract: This paper examines the effect on taxable income inequality among New Zealand individuals of extending the accounting period beyond a single year. Typically, inequality comparisons are based on a single year accounting period and involve cross-sectional measures, ignoring the role of income dynamics. The paper uses a specially constructed dataset of the New Zealand taxpayer population since 2000. Results are reported for the population as a whole and for groups distinguished by age, gender, ethnicity and educational qualifications.
    Keywords: Income inequality, Accounting period, Gini coefficient, Atkinson Index, New Zealand,
    Date: 2022
  8. By: Link, Sebastian (Ifo Institute for Economic Research); Menkhoff, Manuel (Ifo Institute for Economic Research); Peichl, Andreas (Ludwig-Maximilians-Universität München); Schüle, Paul (Ifo Institute for Economic Research)
    Abstract: This paper estimates the causal effect of corporate tax hikes on firm investment based on more than 1, 400 local tax changes. By observing planned and realized investment volumes in a representative sample of German manufacturing firms, we can study how tax hikes induce firms to revise their investment decisions. On average, the share of firms that invest less than previously planned increases by three percentage points after a tax hike. This effect is twice as large during recessions.
    Keywords: investment, corporate taxation, state dependence, business cycle
    JEL: G11 H25 H32 H71 O16
    Date: 2023–04

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