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on Accounting and Auditing |
| By: | Anmol Bhandari; Ellen McGrattan |
| Abstract: | We construct a firm-year panel of income-tax rate reconciliations from annual 10-K filings of public companies to study the effects of the Tax Cuts and Jobs Act (TCJA) on U.S. multinational profit shifting. These reconciliations decompose the gap between company-level effective tax rates and the federal statutory corporate tax rate, allowing us to isolate the contribution of foreign tax advantages before and after the reform. We find that TCJA significantly reduced the tax rate gap and increased effective tax rates for companies most exposed to pre-TCJA international tax benefits. This resulted in an onshoring of profits with foreign profit shares falling 1.3 percentage points per percentage point of tax increase. Among more exposed companies, we find no differential change in investment, employment, or the geographic distribution of sales and installed capital. A neoclassical model of a multinational that chooses where to book its income rationalizes this pattern: the reform raised the average tax on income booked abroad relative to income booked at home, which governs where profits are reported, while the marginal tax on capital, which governs investment, changed by an amount common to all firms. Controlling for deferred-tax windfall gains leaves our main results unchanged. |
| JEL: | F23 H26 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35805 |
| By: | Shi, Yingxin; Shi, Xinyu |
| Abstract: | We exploit the staggered, province-level rollout of China's Fully Digitalized Electronic Invoice (the Shu-Dian- Piao, or FDEI) between late 2021 and 2023 to identify how invoice digitalization affects firms' formal compliance costs and tax compliance, and-most importantly-how these effects are distributed across parties with different bargaining power. Using firms in regions that never opened an FDEI issuance pilot within the window as controls and the Callaway and Sant'Anna (2021) estimator, which is robust to heterogeneous treatment timing, we document three findings. First, on average, firms' administrative- expense ratio rises by about 0.26 percentage points after treatment, with no detectable pre-trend; audit fees, financial-expense ratios, and top-five supplier/customer shares do not change significantly. Second, the increase is highly concentrated: it is about 0.33 percentage points for non-state-owned firms and 0.40 percentage points for small firms, while it is insignificant for state-owned and large firms. Third, tax compliance, measured by book-tax differences, the Desai-Dharmapala residual, and effective tax rates, does not improve on average or in any ownership/size subgroup. The claim robustly supported by the data is therefore the asymmetric incidence of formal compliance costs toward weaker market participants-not the stronger claim that compliance improvement is "decoupled" from compliance costs. The evidence should be read as short-run and conservative, given the concentration of treatment in 2023, the short post-period, and nationwide spillovers from the separately rolled-out receipt side. |
| Keywords: | electronic invoice, tax administration, compliance cost, incidence, staggered difference-in differences, China |
| JEL: | H26 H32 K34 O17 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:esprep:344060 |
| By: | Ben Ranish; Cindy M. Vojtech |
| Abstract: | Adoption of the current expected credit losses (CECL) methodology for loan loss provisioning significantly altered how banks recognize loan losses in their capital calculations. Because capital is a more costly funding source for banks, the accounting change affects banks' cost of funding loans. Using variation in the timing and effect of CECL implementation across firms and loan types, this paper finds that loan loss allowances have a similar causal effect on credit supply as capital requirements. Within our sample, the effect of CECL adoption on loan allowances reduced loan growth by approximately 77 basis points annually in the years following adoption. We find no significant effect of CECL on capital distributions. |
| Keywords: | current expected credit losses (CECL) methodology; bank lending; loan loss provisioning |
| JEL: | G21 G28 M41 M48 |
| Date: | 2026–09–25 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedgfe:103843 |
| By: | International Monetary Fund |
| Abstract: | The Institutional Safeguards Review (ISR), launched by the Executive Board in October 2021, made a range of recommendations to strengthen the Fund’s Data and Analysis Integrity (DAI) frameworks and improve and enhance trust in the Fund’s Dispute Resolution System (DRS). An Implementation Plan (IP) was developed in response in December 2022 comprising 71 actions. As mandated by the Board, the overall implementation of the IP is subject to independent follow-up and validation by the IMF’s Office of Internal Audit (OIA). OIA’s first independent assessment concluded in July 2024 found that 45 IP actions had been completed, leaving 26 actions in progress. The assessment also concluded that actions taken by the Fund had strengthened data and analytical integrity, tone from the top, and the DRS and its processes. This second independent OIA assessment aimed at validating progress on remaining 26 actions. OIA concluded in June 2025 that 20 out of the 26 actions have been completed, all but one related to DRS. In total, 65 IP actions (five for DAI and 60 for DRS) have now been completed representing a 92 percent overall completion rate. Six IP actions remain in progress or delayed status with varying implementation timelines. OIA will cease standalone ISR reporting but will continue to monitor the remaining actions and report periodically to Management and the Board. |
| Keywords: | IP action; IMF's Office of Internal Audit; transparency policy; staff engagement survey; ISR recommendation; OIA audit; Internal audit; Auditing; Audit standards and procedures |
| Date: | 2025–07–25 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfpps:2025/025 |
| By: | Christl, Michael |
| Abstract: | Value-added tax (VAT) systems in EU Member States deviate substantially from a uniform-rate benchmark through reduced rates and exemptions, typically motivated by distributional concerns. This paper provides microsimulation evidence on the fiscal and distributional effects of the full set of VAT expenditures, including both reduced rates and the non-actionable exemption gap covering healthcare, education and financial services mandated by the EU VAT Directive, in five major EU economies (Germany, France, Italy, Spain and Poland) under the 2024 policy baseline. Using EUROMOD and its Indirect Tax Tool with EU-SILC 2022 microdata matched with EU-HBS 2015 expenditure data, and following a compensating variation welfare approach, we simulate a universal standard-rate VAT counterfactual and find that abolishing all VAT expenditures would reduce post-consumption-tax disposable income by 9-21% for bottom-decile households versus 3-5% for the top decile, with Italy and Spain displaying the most regressive reform-cost profiles. The difference in welfare loss between the bottom and top income deciles ranges from -6.3 percentage points in Poland to -16.3 percentage points in Italy. While VAT expenditures offer meaningful purchasing-power protection to lower-income households in proportional terms, this protection is poorly targeted in absolute terms because richer households capture a larger share of the implicit subsidy in absolute cash terms, and could be replicated more efficiently through targeted income transfers. We discuss implications for revenue-neutral VAT reform and the efficiency-equity trade-off in EU indirect taxation. |
| Keywords: | value-added tax, VAT expenditures, reduced rates, exemptions, income inequality, microsimulation, EUROMOD, indirect taxation, European Union |
| JEL: | H23 H25 D31 C15 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:glodps:1828 |
| By: | Rouvinen, Petri |
| Abstract: | Abstract This review synthesizes the latest scholarly evidence on intangible capital. Drawing on 60 recent studies across macro, meso, and micro levels (anchored by firm-level data from Finland, broader Europe, the US, and Asia) it demonstrates that intangible investments have emerged as the preeminent engine of economic growth, competitiveness, and productivity. The literature yields three critical imperatives for public policy. First, the measurement and statistical tracking of intangibles require a fundamental overhaul; at present, a swath of these investments remains invisible in official data and absent from corporate balance sheets. Second, policymakers must broaden their horizons beyond narrow research and development (R&D) subsidies. Modern innovation policy must embrace the full spectrum of intangible assets – spanning software, data, organizational capital, management capabilities, and brand equity –, while capitalizing on the vital synergies between them. Third, the scalable nature of intangible capital demands a synchronized approach to competition policy, innovation strategy, and corporate finance. Authorities must strike a delicate balance: cultivating the incentives and finance necessary to fuel intangible investments, while simultaneously preventing harmful market concentration and fostering broad diffusion of knowledge. |
| Keywords: | Intangible investments, Productivity, Innovation policy |
| JEL: | E22 O34 O47 D24 G32 |
| Date: | 2026–10–06 |
| URL: | https://d.repec.org/n?u=RePEc:rif:wpaper:148 |