nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2023‒12‒04
ten papers chosen by

  1. Effective tax rates of MNEs: New evidence on global low-taxed profit By Felix Hugger; Ana Cinta González Cabral; Pierce O’Reilly
  2. Fed Launches Second Tool to Help Community Banks Meet Accounting Standard By Carl White
  3. Multiple Blockholders, Audit Committee's Power and Earnings Management: Evidence from Indonesia By Astrid Rudyanto
  4. Competition, Harmonization and Redistribution: Corporate Taxes in Switzerland By Marius Brülhart; Marko Koethenbuerger; Matthias Krapf; Raphael Parchet; Kurt Schmidheiny; David Staubli
  5. How to Implement Electronic Fiscal Reporting (Fiscalization) By José Maria Pires; Stephen Howlin; Mr. Frank van Brunschot
  6. Transfer Pricing of Intangible Assets: Evidence from Patent Data By Jesse LaBelle; Ana Maria Santacreu
  7. Optimal taxation and the Domar-Musgrave effect By Brendan K. Beare; Alexis Akira Toda
  8. A Critical Review of the Common Ownership Literature By Kristopher Gerardi; Michelle Lowry; Carola Schenone
  9. IFRS 16 Leasingbilanzierung: Die möglichen Auswirkungen der Leasingbilanzierung nach IFRS auf die Arbeit des Aufsichtsrats By Sendel-Müller, Markus
  10. Federal Reserve Balance-Sheet Policy in an Ample Reserves Framework: An Inventory Approach By Joseph G. Haubrich

  1. By: Felix Hugger; Ana Cinta González Cabral; Pierce O’Reilly
    Abstract: The effective taxation of corporate profits is at the centre of an active public and academic debate. This debate is often focused on the extent of low-taxed profit of multinational enterprises (MNEs) in jurisdictions with low statutory tax rates or low average effective tax rates (ETRs). However, some affiliates in high tax jurisdictions may also be subject to low ETRs, due to tax incentives or other provisions. To date, a global accounting of the ETRs paid by MNEs that incorporates within-country heterogeneity has been missing. Using a new dataset on the global activities of large MNEs, this paper provides new estimates of the distribution of effective tax rates of large MNEs across and within jurisdictions. The results show that low tax profit is common, and that substantial low-taxed profit exists outside low tax jurisdictions. We estimate that high tax jurisdictions (jurisdictions with average ETRs of above 15%) account for more than half (53.2%) of global profits taxed below 15%, much more than very low tax jurisdictions (those with average ETRs below 5%) which only account for 18.7% of low-taxed profits. This suggests that an assessment of global low-taxed profit that focuses only on jurisdictions with low average ETRs could potentially miss out on more than half of global low-taxed profit.
    JEL: H F
    Date: 2023–11–21
  2. By: Carl White
    Abstract: The Expected Losses Estimator (ELE) is a spreadsheet-based tool to help community banks calculate allowances for credit losses under the CECL standard.
    Keywords: community banks; accounting standards
    Date: 2022–07–28
  3. By: Astrid Rudyanto (Trisakti School of Management, Indonesia Author-2-Name: Resti Rachma Hidagusti Author-2-Workplace-Name: Trisakti School of Management, Indonesia Author-3-Name: Author-3-Workplace-Name: Author-4-Name: Author-4-Workplace-Name: Author-5-Name: Author-5-Workplace-Name: Author-6-Name: Author-6-Workplace-Name: Author-7-Name: Author-7-Workplace-Name: Author-8-Name: Author-8-Workplace-Name:)
    Abstract: " Objective - The purpose of this study is to empirically analyze the impact of the power status of audit committees and multiple blockholders on accrual earnings management. Methodology – This study applied a quantitative research method with secondary data from the annual report. In this research, manufacturing companies were used as samples listed on the Indonesia Stock Exchange with a total of 4 years ranging from the period of 2018 – 2021. This research used multiple regression with fixed effect driscoll-kraay standard error. Findings – It is revealed that multiple blockholders have a positive impact on accrual and real earnings management, while the power status of the audit committee has no impact on accrual and real earnings management. It can be implied that in Indonesia, multiple blockholders play a significant role in increasing earnings management, and audit committees' power cannot reduce earnings management in the presence of multiple blockholders. Novelty – Previous literature argues that the power of audit committees should be bigger than management to control earnings management. However, in the context of Indonesia, where a concentrated ownership structure is prevalent, multiple blockholders can play a significant role in earnings management. This study is the first to analyze the negative effect of multiple blockholders in the country, which is dominant with a concentrated ownership structure. If multiple blockholders enjoy the private benefits of control through earnings management, the audit committee's power over management would be useless."
    Keywords: Earnings Management; power status of audit committee; multiple blockholder; monitoring; ownership.
    JEL: C33 D22 G34
    Date: 2023–09–30
  4. By: Marius Brülhart; Marko Koethenbuerger; Matthias Krapf; Raphael Parchet; Kurt Schmidheiny; David Staubli
    Abstract: Switzerland could be considered as a test case for international corporate-tax policy coordination. It is a federation of 26 fiscally autonomous cantons that have been taxing corporate profits more or less independently for over a century. We document and discuss corporate taxation in Switzerland, with a focus on three aspects: (a) the evolving within-country geography of taxable profits and corporate tax rates, (b) the nature and historical emergence of formal tax-base harmonization, and (c) the functioning of fiscal equalization. Parallels are drawn and differences are discussed relative to ongoing efforts at international tax coordination.
    JEL: H25 H71 H77
    Date: 2023–11
  5. By: José Maria Pires; Stephen Howlin; Mr. Frank van Brunschot
    Abstract: To improve the management of tax compliance risks, tax administrations are increasingly seeking opportunities to enhance their access and use of data. For many years, there has been a worldwide trend to implement electronic fiscal reporting (also known as fiscalization) to achieve these aims. Fiscalization refers to the process of automated reporting of a taxpayer’s business activities to the tax administration. When implemented as an integral part of compliance risk management processes, fiscalization will contribute to an improvement in tax compliance by making it easier for taxpayers to voluntarily comply, and discouraging taxpayers who may choose to not report their business transactions. However, fiscalization alone will not address all tax compliance risks. This how-to note provides practical guidance about the case for fiscalization and implementation approaches, including good practices and practices to avoid in relation to the key dimensions of fiscalization: data collection, data analysis, integration with compliance risk management, consumer engagement, and implementation.
    Keywords: tax compliance; fiscalization; electronic fiscal devices
    Date: 2023–11–06
  6. By: Jesse LaBelle; Ana Maria Santacreu
    Abstract: To reduce their tax exposure, multinationals may seek to shift profits to countries with lower tax rates. Do patents play a role in this strategy?
    Keywords: patents; corporate taxes; multinational corporations
    Date: 2022–08–09
  7. By: Brendan K. Beare; Alexis Akira Toda
    Abstract: This article concerns the optimal choice of flat taxes on labor and capital income, and on consumption, in a tractable economic model. Agents manage a portfolio of bonds and physical capital while subject to idiosyncratic investment risk and random mortality. We identify the tax rates which maximize welfare in stationary equilibrium while preserving tax revenue, finding that a very large increase in welfare can be achieved by only taxing capital income and consumption. The optimal rate of capital income taxation is zero if the natural borrowing constraint is strictly binding on entrepreneurs, but may otherwise be positive and potentially large. The Domar-Musgrave effect, whereby capital income taxation with full offset provisions encourages risky investment through loss sharing, explains cases where it is optimal to tax capital income. In further analysis we study the dynamic response to the substitution of consumption taxation for labor income taxation. We find that consumption immediately drops before rising rapidly to the new stationary equilibrium, which is higher on average than initial consumption for workers but lower for entrepreneurs.
    Keywords: consumption tax; income tax; optimal taxation
    Date: 2023–11
  8. By: Kristopher Gerardi; Michelle Lowry; Carola Schenone
    Abstract: The rapid growth in index funds and significant consolidation in the asset-management industry over the past few decades has led to higher levels of common ownership and increased attention on the topic by academic researchers. A consensus has yet to emerge from the literature regarding the consequences of increased common ownership on firm behavior and market outcomes. Given the potential implications for firms and investors alike, it is perhaps not surprising that policymakers, legal scholars, finance and accounting academics, and practitioners have all taken a keen interest in the subject. This paper provides an overview of the theoretical underpinnings of common ownership and critically reviews the empirical literature. Measurement issues and identification challenges are detailed, and a discussion of plausible causal mechanisms is provided. Across the newest papers employing the most credible identification techniques, there is relatively little evidence that common ownership causes lower competition. However, further research is necessary before broad conclusions can be reached.
    Keywords: common ownership; institutional investors; corporate governance
    JEL: G23 G32 G34 L22
    Date: 2023–11–08
  9. By: Sendel-Müller, Markus
    Abstract: Die Umstellung der Leasingbilanzierung von IAS 17 auf IFRS 16 ab dem 01.01.2019 ist ein typisches Beispiel dafür, wie sich Änderungen in Rechnungslegungsnormen auf die Angaben und Strukturen in Jahresabschlüssen und diese ergänzende Lageberichte auswirken können. Doch neben einer anderen optischen Darstellung, können sich auch materielle Effekte ergeben. Denn durch neue beziehungsweise überarbeitete Rechnungslegungsstandards können sich steuerungs- und vergütungsrelevante Kennzahlen oder Covenant-Klauseln in Kreditverträgen verändern. Vor diesem Hintergrund ergibt sich für Aufsichtsratsgremien ein permanenter Bedarf zur Qualifikation in Fragen der Rechnungslegung, um eigenständig bei neuen Entwicklungen im Bilanzrecht mögliche Folgewirkungen abschätzen zu können.
    Keywords: Demokratie und Mitbestimmung in der Wirtschafts- und Arbeitswelt stärken, Jahresabschlussprüfung, Kennzahlen, Berichterstattung, Unternehmen
    Date: 2023
  10. By: Joseph G. Haubrich
    Abstract: I apply techniques from stochastic inventory theory to calibrate the optimal balance-sheet buffer needed to implement monetary policy in an ample reserves regime. I quantify the size of the buffer to be about $60 billion. This is small relative to the reserves needed for an ample reserves regime, even though the FOMC appears to act as if the cost of too few reserves is over 20 times as high as the cost of too many.
    Keywords: reserves; monetary policy
    JEL: E58 D25
    Date: 2023–11–08

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