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on Accounting and Auditing |
| By: | Koch, Reinald; Ostermann, Leon; Spengel, Christoph |
| Abstract: | This paper examines how jurisdictions have responded to the introduction of the OECD Pillar Two framework and analyses the implications of these developments for international tax competition. Using a comprehensive dataset covering 223 tax systems, we examine the global implementation of Pillar Two mechanisms, the development of statutory corporate income tax (CIT) rates between 2015 and 2025, the redesign of tax incentives, and the extent to which Pillar Two establishes a level playing field for multinational enterprises. The findings reveal substantial asymmetries in the implementation and practical operation of Pillar Two. By 2026, only a limited group of jurisdictions had implemented all major Pillar Two mechanisms, although implementation is considerably more widespread among European countries. At the same time, the long-run decline in statutory CIT rates appears to have slowed following the 2021 Pillar Two agreement. However, low-tax jurisdictions continue to compete through alternative channels, including substance-based tax incentives and preferential regimes designed to interact favourably with Pillar Two rules. Overall, the evidence suggests that Pillar Two is unlikely to eliminate international tax competition but instead may fundamentally reshape its structure. At the same time, heterogeneous implementation across jurisdictions creates the risk that the regime amplifies existing international differences in effective corporate taxation rather than establishing a genuinely level global playing field. |
| Keywords: | Global Minimum Tax, tax competition, firm competition, corporate tax law |
| JEL: | H25 K34 F23 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:zewdip:343044 |
| By: | Holmes, Mark |
| Abstract: | This study evaluates whether the EU’s Audit Directive and Regulation (EU ADR) changed the relationship between auditor provided non-audit services (NAS) and auditor independence in the UK. While NAS can create economic bonding that suppresses negative reporting, it may also generate knowledge spillovers that improve the auditor’s client-specific knowledge and reporting quality. Using UK-listed, UK-headquartered non-financial firms from 2010-2020, we examine whether EU ADR implementation moderated NAS-related economic incentives across two reporting thresholds; qualified opinions and going-concern comments. Our study finds no evidence that NAS is associated with audit qualifications, nor that EU ADR changed this relationship. In contrast, we document a significant post-EU ADR shift in the NAS-going-concern comment relationship. Prior to the EU ADR, higher NAS was associated with a lower likelihood of going-concern comments; after implementation this negative association is significantly attenuated, that is consistent with reduced economic bonding in discretionary reporting. Similarly, probability-scale effects indicate economically meaningful changes in going-concern comment behaviour, while high-threshold, qualification decisions, remain largely unchanged. Results are robust to alternative specifications and audit firm heterogeneity. Overall, engagement-level NAS restrictions appear to matter primarily where auditors retain reporting discretion, informing debates on structural reforms such as the UK’s operational separation policy. |
| Date: | 2026–03–31 |
| URL: | https://d.repec.org/n?u=RePEc:akf:cafewp:41 |
| By: | Roshan Ghadamian (Institute for Regenerative Systems Architecture) |
| Abstract: | Public infrastructure is increasingly delivered through financialised models despite extensive evidence of higher long-term cost, rigidity and fiscal risk. This paper argues their persistence is driven less by economic performance than by how public-sector accounting classifies capital, obligations and time. Public accounting frameworks are built to enforce annual fiscal discipline and control debt. They are not built to represent capital continuity or mission-aligned renewal. So a delivery model that defers recognition of obligations, smooths expenditure across reporting periods, or moves commitments off balance sheet appears fiscally responsible while embedding greater long-term fragility — and the appearance is what gets compared. â The claim is causal rather than descriptive. Accounting does not merely record infrastructure choices; it structures them, by rendering capital continuity, mission cycles and deferred fragility invisible. On that account the persistence of financialised delivery is an accounting outcome rather than a policy anomaly — the model is selected by the classification system, not by evidence of superiority. âš ï¸ And the paper's own conclusion is that its layer cannot fix this. Standards operationalise priorities; they do not set them. Without a conceptual expansion of public finance that recognises capital continuity as an object in its own right, accounting reform can only rearrange the surface of the problem. |
| Keywords: | public accounting, off-balance-sheet, capital continuity, deferred fragility, accounting selection, public--private partnerships, fiscal classification |
| JEL: | H83 M41 H54 H61 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:evk:wpaper:ppp-abs |
| By: | Sauer, Radek (Central Bank of Ireland) |
| Abstract: | The paper explores how a small low-tax economy is affected by foreign corporatetax shocks. To address this question, I develop a dynamic general-equilibrium model, in which multinational firms engage in both tangible and intangible FDI. Intangible assets arise from multinationals’ R&D activities. Each multinational decides whether to place its intangibles in the parent firm or in an overseas affiliate. The placement decision shapes the intra-firm trade in royalties and R&D services. The model reveals that corporate taxes can directly impact arm’s-length prices of multinational firms. I investigate territorial corporate taxation as well as worldwide taxation of intangible income. |
| Keywords: | intangible assets, multinational enterprises, corporate taxation, royalties, R&D services, endogenous markups. |
| JEL: | E22 E62 F23 H25 |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:cbi:wpaper:10/rt/26 |
| By: | Jeremy Bertomeu; Edwige Cheynel; Peicong Hu |
| Abstract: | We study voluntary disclosure when investors observe firm reports through noisy information intermediaries such as auditors, analysts, rating agencies, or data providers. Any processing noise overturns the standard prediction of a unique partial-disclosure equilibrium. With low disclosure costs, the model unravels to full disclosure despite positive costs. With higher costs, the game admits two threshold equilibria featuring different disclosure probabilities. We characterize how the cost threshold for unraveling and the equilibrium set respond to changes in noise and fundamental uncertainty. In settings with high disclosure, both uncertainty and processing noise reduce disclosure, while higher certification costs can counterintuitively increase it. Endogenizing disclosure costs as optimal fees shows how profit-maximizing intermediaries select among equilibria, potentially generating a high-fee, high-disclosure regime. Extensions with bounded support, uncertain information endowment, endogenous noise, and competing information sources apply the insights to general information environments. The results caution against interpreting greater frictions as necessarily reducing disclosure. |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2609.07898 |
| By: | Sriya Anbil; Alyssa G. Anderson; Lucy Cordes; Romina Ruprecht |
| Abstract: | As the Federal Reserve (Fed) navigates periods of balance sheet expansion and reduction, it has become increasingly important to understand how changes in the size and composition of Fed assets affect short-term funding markets. The overnight Treasury repo market is central to this relationship since it is a transmission channel through which balance sheet policy can affect money market conditions and, ultimately, the Fed's policy rate, the effective federal funds rate (EFFR). |
| Date: | 2026–08–26 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedgfn:103714 |
| By: | William Pagel (University of Oxford and Bank of England) |
| Abstract: | What is the socially optimal long-run size of the central bank balance sheet, once interest rates are away from the effective lower bound and the balance sheet is no longer needed for monetary stimulus? I introduce a central bank into a model in which banks are liquidity mismatched and prone to sudden ‘bank runs’. Supplying central bank reserves reduces the likelihood and severity of runs, but comes at a cost: constraints on the set of securities the central bank can hold mean a larger balance sheet crowds out private investment and misallocates capital. I calibrate the model to pre-financial crisis conditions and empirical estimates of the non-linear reserve demand curve, and compute optimal policy. Under full information, it is optimal to expand reserve supply to the point where reserve demand is satiated, but no further. However, because under-supplying reserves is more costly than over-supplying them, robustness to parameter uncertainty calls for an additional buffer in reserve supply. But even for high degrees of robustness, the buffer needed is no larger than two and a half percentage points of bank assets. The policy prescription remains restrained: robustness moves the balance sheet modestly beyond satiation, but fails to justify an open-ended provision of abundant reserves. |
| Keywords: | Reserve supply;central bank reserves;optimal policy;bank runs |
| JEL: | E44 E52 E58 G21 |
| Date: | 2026–08–28 |
| URL: | https://d.repec.org/n?u=RePEc:boe:boeewp:023578 |