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on Accounting and Auditing |
| By: | Sean S. Cao; Lin William Cong; Baozhong Yang |
| Abstract: | To understand the disruption and implications of distributed ledger technologies for financial reporting and auditing, we analyze firm misreporting, auditor monitoring and competition, and regulatory policy in a unified model. A federated blockchain for financial reporting and auditing can improve verification efficiency not only for transactions in private databases, but also for cross-chain verifications through privacy-preserving computation protocols. Despite the potential benefit of blockchains, private incentives for firms and first-mover advantages for auditors can create inefficient under-adoption or partial adoption that favors larger auditors. Although a regulator can help coordinate the adoption of technology, endogenous choice of transaction partners by firms can still lead to adoption failure. Our model also provides an initial framework for further studies of the costs and implications of the use of distributed ledgers and secure multi-party computation in financial reporting, including the positive spillover to discretionary auditing and who should bear the cost of adoption. |
| JEL: | D21 D40 G32 G34 M42 M48 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32763 |
| By: | Samuel Moore; Ana Maria Santacreu |
| Abstract: | Ireland’s elimination of a controversial tax avoidance strategy appears to be driving a recent increase in royalty payments from Ireland to the U.S. |
| Keywords: | royalties; taxes; tax avoidance |
| Date: | 2024–08–08 |
| URL: | https://d.repec.org/n?u=RePEc:fip:l00001:98681 |
| By: | Scott R. Baker; Pawel Janas; Lorenz Kueng |
| Abstract: | Empirical research in public economics, including our own, often uses variation in state and local taxes as an empirical laboratory to estimate causal relationships. A key concern is that other taxes might change at the same time. To assess this concern, we develop a dataset of state (1977–2022) and local (2000–2022) tax rates and revenue from personal income, corporate income, property, sales, and excise taxes. This new dataset generates two key results. First, we find that taxes of different types tend to co-move within a jurisdiction: a tax change of one type can more than double the likelihood of a second tax type changing in the same year. Local tax changes also co-move with tax changes enacted by the state they are located in. This positive correlation can upwardly bias elasticity estimates, but only moderately. For example, regressing state economic outcomes on the full set of state tax changes yields elasticities that are about 10–30% smaller than those obtained from using a single tax type in isolation. Second, we document that the mix of taxes across state and local jurisdictions is very different, and that these differences have become more pronounced over time as jurisdictions have increasingly become reliant on the single tax type—sales, personal or corporate income tax—that was most prominent for them in the earliest part of our sample. |
| JEL: | H20 H71 H72 H77 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32786 |
| By: | Dinara Alpysbayeva; Annette Alstadsæter; Wojciech Kopczuk; Simen Markussen; Oddbjorn Raaum |
| Abstract: | We analyze the reporting response to an ambitiously targeted government support scheme for Norwegian businesses at the very start of the Coronavirus crisis in 2020. Our empirical design is based on cross-checking self-reported data in the applications for support with administratively reported data used for VAT. We find strong evidence that strategic misreporting was present but conclude that its remaining quantitative extent after enforcement actions already taken by the tax authorities was relatively small. Firms tend to misreport 4 percent more often than expected, and the actual support paid out was 5 percent higher than it should have been. We discuss possible reasons for the relatively limited extent of non-compliance and more general lessons for the design of transfer programs |
| JEL: | H25 H26 H83 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32801 |
| By: | Douglas Cumming; Randall Morck; Zhao Rong; Minjie Zhang |
| Abstract: | Because corporate limited liability protects founder’s personal assets, creditors often require founders of new, small and risky firms to contract around limited liability by pledging their personal assets as collateral for loans to their firms. This makes personal bankruptcy law (PBL) relevant to corporate finance. We find that pro-debtor PBL reforms increase the number of patents filed, citations to those patents, and début patents by firms with no previous patents. These reforms also redistribute innovation across industries in closer alignment to its distribution in the U.S., which we take to approximate industry innovative potential. These effects are driven by firms without histories of high-intensity patenting, and are damped in countries that impose minimum capital requirements on new firms. Firms with largescale legacy technology may avoid radical innovations that devalue that technology. Consequently, new, initially small and risky firms often develop the disruptive innovations that contribute most to economic growth. Consistent with this, we also find pro-debtor PBL reforms increasing value-added growth rates across all industries, and by larger margins in industries with more innovation potential. Our difference-in-differences regressions use patents and PBL reforms for 33 countries from 1990 to 2002, with subsequent years used to measure citations to patents in this period. |
| JEL: | G33 G5 K35 O3 O4 P1 P50 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32826 |