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on Accounting and Auditing |
| By: | Gaul, Johannes; Schulz, Inga |
| Abstract: | This paper examines whether multinational enterprises (MNEs) adapt to international anti-tax avoidance regulation by intensifying domestic profit shifting activities. We compile a novel dataset by mapping MNE ownership network structures that link international to sub-national tax haven subsidiaries over time. Our analyses show that tighter international rules lead more strongly affected firms to intensify their presence in sub-national tax havens, consistent with strong increases in profit tax revenues at these locations. This shift indicates that international tax policies have had bite in constraining cross-border tax avoidance. At the same time, our findings reveal MNEs' strategic flexibility and highlight domestic spillovers and local consequences of global tax reforms. |
| Keywords: | Corporate Networks, Geospatial Data, ATAD, CbCR |
| JEL: | H26 H71 K10 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:zewdip:340013 |
| By: | Athiphat Muthitacharoen; Archawa Paweenawat; Krislert Samphantharak; Chanont Banternghansa |
| Abstract: | While most research on profit shifting focuses on multinational corporations, this study highlights how domestic corporate groups can exploit governance gaps in tax policy. Specifically, we use administrative data from Thailand to show how SME tax incentives inadvertently encourage intra-group profit relocation, revealing critical vulnerabilities in the design of size-based tax systems. We construct a comprehensive panel dataset covering all registered Thai firms from 2004 to 2017 by linking firm-level financial statements with ownership information to identify corporate group structures. Our empirical analysis exploits a 2011 reform that introduced a revenue-based eligibility threshold for SME tax incentives, creating differential tax treatment among affiliated firms within the same corporate group. The difference‑in‑differences analysis indicates strong evidence of tax-motivated profit shifting: profitability among tax-eligible SMEs within corporate groups increased by 75.8% from their pre-policy level when compared to ineligible affiliates. Our findings further suggest that corporate groups primarily engage in transfer pricing rather than strategic debt allocation as a means of maximizing total profits. We also find that these responses are significantly stronger among smaller corporate groups, groups with weaker governance structures, and those with lower industry diversification, suggesting that internal oversight and organizational complexity constrain opportunistic behavior. These findings demonstrate that profit shifting is not exclusive to multinational firms and underscore the importance of incorporating corporate group structures and governance realities into the design of domestic tax policy. |
| Keywords: | Profit shifting; Corporate groups; Corporate governance; Tax avoidance; Domestic transfer pricing |
| JEL: | H25 H26 K34 |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:pui:dpaper:248 |
| By: | J. Z. Zhang (Audencia Business School) |
| Abstract: | Repurchase agreements (repos) are often used by banks to manipulate their reported quarter-end risk levels. Prior research has documented adverse capital market consequences associated with active window dressing of repo liabilities. In this study, we investigate whether repos also affect auditors' risk assessments of client banks. Our study reveals that auditor reactions to repos are contingent on the client bank's liquidity constraints, rather than on the extent of repo transactions. Specifically, we find that downward quarter-end deviations in repo liabilities are not perceived by auditors as risky actions for banks with more liquidity. For banks with high liquidity risk exposure, however, we document a strong positive association between repo deviations and audit fees. Our findings suggest that auditors could utilise the contextual cue of liquidity constraints in their attempt to resolve ambiguity surrounding repo transactions, and accordingly charge higher fees for riskier clients. Our results persist for other types of auditor responses, including auditor changes and the issuance of going concern opinions. |
| Keywords: | repos, audit fees, liquidity risk |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05578404 |
| By: | Kusachi, Takahiro |
| Abstract: | Independence regulations governing the auditor-to-client revolving door — exemplified by SOX Section 206 — target only the auditor's side of the engagement. They do not address the transformation in information structure that occurs when a former auditor assumes a financial leadership role at an audit client. This paper argues that such appointments trigger a fundamental shift in the game-theoretic structure of the audit relationship. Drawing on Aumann's (1976) common knowledge framework, Spence's (1973) signaling theory, and Crawford and Sobel's (1982) cheap talk model, we theorize this shift as a transition from an authority-deference mode to a joint constraint confirmation mode of audit negotiation. We conceptualize the underlying mechanism as the intra-institutional circulation of audit knowledge: the systematic transfer of audit expertise through personnel mobility within the organizational field of auditing (DiMaggio & Powell, 1983). The appointment partially resolves and locally reverses information asymmetry (P1); this structural change shifts the mode of audit negotiation (P2); and the shift carries ambivalent consequences — improving efficiency while generating a risk of independence becoming nominal (P3). These propositions offer a theoretical mechanism for the mixed empirical findings of prior revolving door research, and identify a structural blind spot in current independence regulation. This is a conceptual paper grounded in reflexive practitioner analysis (Schön, 1983). The author is a former PricewaterhouseCoopers CPA with experience as a financial executive at audit clients — a vantage point unavailable to external researchers. The propositions are offered as a structured invitation to subsequent empirical research. |
| Date: | 2026–04–07 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:986kq_v1 |
| By: | Egbert, Henrik; Stancheva-Todorova, Eleonora |
| Abstract: | This paper explores how economic theory can improve international business education. It focuses on teaching international accounting. The approach uses key ideas from New Institutional Economics (NIE). Students learn concepts such as asymmetric information, principal–agent relationships, and transaction costs. A low-cost online lecture introduces these ideas. A case study on creative accounting shows how institutions shape accounting practices. The method broadens students’ perspectives and strengthens decision-making skills. It also prepares them for global careers. Evidence from an undergraduate module shows strong learning outcomes. The paper offers a practical model for integrating economic theory into international accounting education. |
| Keywords: | teaching international accounting; case study methods; blended learning; international accounting and New Institutional Economics; integrated approach; creative accounting |
| JEL: | A12 A22 B52 M41 |
| Date: | 2026–01–01 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:128366 |
| By: | Felix J. Bierbrauer (University of Cologne); Pierre C. Boyer (CREST, Ecole Polytechnique, Institut Polytechnique de Paris); Andreas Peichl (ifo Munich, LMU Munich, CESifo, IHS & IZA); Daniel Weishaar (University of Cologne) |
| Abstract: | The key question in multi-dimensional screening problems is how prices, incentives, or marginal tax rates in one economic activity should vary with other activities. We develop a theory of tax reforms in a setting with multidimensional heterogeneity amongst agents who take two economic decisions. Our leading application is the taxation of couples who choose an earnings level for each spouse. In our theoretical analysis, we characterize the conditions under which reforms of a given tax system yield Pareto- or welfare improvements. In an empirical application to the US, we quantify the welfare implications of such reforms. We also prove an impossibility result: under assumptions common in the tax perturbation literature, the hypothesis that the given status quo tax is optimal leads to a contradiction. Thus, the perturbation approach cannot be used to characterize a fully optimal tax system. |
| Keywords: | Tax reforms, Multi-dimensional screening, Taxation of Couples, Optimal taxation |
| JEL: | C72 D72 D82 H21 |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:ajk:ajkdps:401 |
| By: | Lorie Logan |
| Abstract: | Dallas Fed President Lorie Logan delivered these remarks at the Eleventh District Banking Conference. |
| Keywords: | balance sheet; banking system; Federal Reserve; reserves |
| Date: | 2026–04–02 |
| URL: | https://d.repec.org/n?u=RePEc:fip:feddsp:103006 |
| By: | Paduano, Stephen |
| Abstract: | There is widespread consensus that Europe requires increased investment to stimulate growth and address pressing challenges. However, fiscal constraints often hinder government-led initiatives. This policy note conducts a balance sheet analysis of the European Investment Bank (EIB) to determine the degree to which it is operating at capacity to support Europe’s priorities. |
| Keywords: | International Finance, Foreign Aid, International Institutional Arrangements, Financial Institutions and Services, Role of International Organizations |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:cpm:notfdl:2515 |