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on Accounting and Auditing |
| By: | Giulia Aliprandi (International Tax Observatory); Teona Cretu (International Tax Observatory); Vytautas Valuta (International Tax Observatory) |
| Abstract: | The European Union's Public Country-by-Country Reporting (CbCR) Directive aims to make where multinationals operate and where they pay tax visible to investors, regulators, and the public. This report asks whether the Directive delivers on that objective, examining three questions: does the regime add new public information, how complete is the disclosure, and how much of multinational activity does its geographical design make visible? Using the first comprehensive dataset of public CbCR filings under the Directive — 144 multinationals from 24 headquarters countries, covering financial years 2023 and 2024, for a total of 164 reports, drawn from Romania's early transposition — three findings emerge. First, the Directive adds new public information, since most multinationals now publishing have no prior voluntary disclosure history, but coverage falls short of its theoretical scope: only 20% of the 569 non-EU multinationals estimated to be in scope have published a report. Second, 38% of reports are incomplete, most commonly limited to Romania only, driven mainly by parent non-cooperation and safeguard clause invocations. Third, the Directive's geographical design leaves a large share of multinational activity aggregated into a residual "Others" category, which absorbs 71% of profits and 74% of revenues in the Romanian data. The report recommends the Commission's review prioritise widening disclosure, addressing parent non-cooperation, and establishing a centralised repository for filings. |
| Keywords: | Public country-by-country reporting; Country-by-country reporting; Tax transparency; Corporate tax transparency; Multinational enterprises; Profit shifting; Tax avoidance; EU tax policy; Tax disclosure; Base erosion and profit shifting |
| JEL: | H25 H26 F23 K34 M41 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:dbp:report:011 |
| By: | Hubert Tchakoute Tchuigoua |
| Abstract: | The microfinance sector, with its diverse ownership structures and distinctive capital structure, provides a unique setting to examine cross-country differences in financial reporting practices. However, research on how the legal enforcement environment affects the financial reporting quality of development finance organizations, such as microfinance institutions (MFIs), remains limited. This study hypothesizes that higher financial reporting quality is associated with earnings that are less subject to earnings management. We assess financial reporting quality using abnormal loan loss provisions as a proxy for earnings management. Analyzing a global dataset of MFI financial statements spanning 15 years (2003–2017), we find that financial reporting quality is higher in weaker legal enforcement environments. This suggests that when enforcement is weak, investors rely less on accounting information, leading to less earnings management and higher financial reporting quality. In addition, our results suggest that for-profit MFIs and those less dependent on subsidies engage in less upward earnings management in weak enforcement environments. |
| Date: | 2026–09–01 |
| URL: | https://d.repec.org/n?u=RePEc:ulb:ulbeco:2013/413359 |
| By: | Radek Sauer; Radek Šauer |
| Abstract: | The paper explores how a small low-tax economy is affected by foreign corporate-tax 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 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12957 |
| By: | Pingyang Gao; Jinzhi Lu; Zhenpeng Yang |
| Abstract: | This paper provides a theoretical framework to evaluate the trade-off between the self-regulated peer review system and independent government inspection (PCAOB) in the auditing profession. We model the peer review system as a Judgment Regime, where a stakeholder utilizes professional expertise, captured as a private signal, to make ex-post decisions on verifying audit failures. In contrast, PCAOB inspection is modeled as a Commitment Regime, where the stakeholder lacks private information but can commit ex-ante to a predetermined level of verification. We find that the Judgment Regime benefits from a resource-allocation effect and a deterrence effect driven by informed verification, whereas the Commitment Regime deters audit failures through the first-mover advantage of ex-ante commitment. Our analysis demonstrates that the stakeholder prefers the peer review system if and only if the private signal is sufficiently informative. Furthermore, comparative statics reveal that higher verification costs or stronger audit incentives shift the stakeholder's preference toward PCAOB inspection. |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2609.24020 |
| By: | Simon Oluoch Ochieng (Institute of Economic Studies, Charles University, Prague, Czech Republic) |
| Abstract: | This paper examines Ba a as a Czechoslovak multinational corporation during the Great Depression. It asks how a large export-oriented firm used foreign subsidiaries, related-party prices, foreign-exchange arrangements, tax accounting, and domestic employment to manage the crisis between 1929 and 1934. The paper draws on archival material from the Ba a I/9–Daòové oddìlení collection, including Ministry of Finance, tax-audit, foreign-exchange, wage, retail-tax, manager-remuneration, and whistleblower files. The evidence indicates that Ba a´s multinational structure served as a system for allocating prices, profits, currency, losses, receivables, and personnel across borders. State experts described foreign-company accounts as an accounting bridge between Zlín and foreign markets and reconstructed large alleged undeclared foreign-trade profits. The Czechoslovak state responded through audits, export-price reconstructions, questions about accounting categories, foreign-currency investigations, requests for foreign-account statements, and settlement negotiations. Ba a also maintained a substantial domestic employment, retail, and tax footprint, which helped the firm defend contested international practices as beneficial to the national economy. This paper contributes to economic history by showing how a Central European multinational used cross-border organization under Depression conditions and how the state tried to make that organization visible, taxable, and controllable. |
| Keywords: | Ba a; Czechoslovakia; Great Depression; multinational enterprise; transfer pricing; foreign exchange; tax avoidance; economic history |
| JEL: | F23 N14 N44 N84 H25 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:fau:wpaper:wp2026_29 |
| By: | Alexander Hansak (University of Graz, Austria) |
| Abstract: | This paper studies how endogenous tax compliance changes the incidence of capital taxation when households earn heterogeneous returns. I develop an incomplete-markets heterogeneous-agent model in which households save, invest in entrepreneurial activities, and can conceal capital-side tax liabilities. Disciplined by U.S. evidence, the model quantifies how concealment creates a wedge between statutory and effective capital taxation and how this wedge interacts with return heterogeneity, the statutory tax rate, and the choice of tax base. Changing the tax base generates a substantial endogenous compliance response: replacing the capital-income tax with a revenue-equivalent wealth tax reduces the liability-weighted concealment rate from 15.9% to 3.3% and raises long-run welfare. The difference between statutory and effective taxation also becomes increasingly important at high capital-income tax rates. At a 40% statutory rate, output is nearly 7% higher with endogenous evasion than under perfect compliance, while capital-tax revenue is about one third lower. Finally, transition dynamics under a balanced-budget fiscal closure reveal a distinct fiscal-timing margin. Abolishing capital-income taxation raises long-run welfare but lowers welfare of households alive at implementation, whereas the wealth-tax replacement raises welfare both at implementation and in the long run. The incidence of capital taxation therefore depends jointly on statutory tax policy, endogenous compliance, and the dynamics of fiscal adjustment. |
| Keywords: | Tax evasion, Tax enforcement, Capital income taxation, Wealth taxation, Heterogeneous returns, Wealth inequality |
| JEL: | H21 H22 H26 E21 E22 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:grz:wpaper:2026-20 |
| By: | Andrea Bellinello |
| Abstract: | Municipal Owned Corporations (MOCs) are a very common type of form in the panorama of hybrid organizations, combining public ownership with the operational logic of private law. To this end, these types of organizations represent a fertile ground for studying how accounting is aimed at mediating institutional complexity. Referring to the framework dictated by institutional work theory, the case study in question is aimed at examining how organizational actors intentionally create, maintain and interrupt accounting practices. In question, the case study adopts the accounting tool as a neutral technical instrument but as the object and result of the institutional work of those who design, negotiate and use it. The case study is based on a longitudinal case of an Italian MOC called Gamma, with data collected over three years through 16 meetings and 10 qualitative interviews developed with CEO, CFO and managers and line managers. The esults are aimed at demonstrating how the strategic plan builds organizational identity and reconciles managerial and public logics, with incorporation and reflexivity as key factors in the universe of hybrid organizations. |
| Keywords: | institutional work; hybrid organizations; municipal owned corporations; accounting instrument; embedded agency |
| JEL: | M41 H83 |
| Date: | 2026–09–15 |
| URL: | https://d.repec.org/n?u=RePEc:udf:wpaper:20260215 |
| By: | Berman, Yonatan; Klor, Esteban F. |
| Abstract: | In this paper, we analyse the effects of dividend tax reforms on tax revenues, income shifting and earnings retention. We examine two significant policy changes in Israel during the 2010s. Using administrative tax records, we study a permanent increase of 5 percentage points in the dividend tax rate in 2012 and a temporary tax relief enacted in 2017. The permanent tax hike triggered an immediate surge of over 100 per cent in reported dividend income and tax revenues. It did not generate a lasting shift in dividend flows. In contrast, the temporary relief of 2017 led to a sharp decline in dividend payments upon its expiration. Notably, dividend payments remained depressed after the preferential rate ended, consistent with increased earnings retention and possibly with anticipation of similar future relief. Finally, our counterfactual estimates imply that post-2017 retention increased the downward bias in the reported top 1 per cent income share by 1–2 percentage points because income retained within firms is absent from personal tax records. |
| Keywords: | capital tax reform;income shifting;retained earnings |
| JEL: | J1 F3 G3 |
| Date: | 2026–09–08 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:140934 |
| By: | Ben Tippet (King’s College London); Gabriel Zucman (Paris School of Economics; University of California, Berkeley) |
| Abstract: | The super-rich in the UK, like in many OECD countries, pay lower effective tax rates than ordinary workers. At the same time, the wealth of the richest 300 households has increased from around 5% of GDP in 1989 to 16% today. This report presents a response to these challenges: a minimum 2% average annual tax on the total wealth of households with more than £100 million in wealth. The tax would raise around £10 billion in 2026, equivalent to 0.3% of GDP and almost one-third of the projected government current budget deficit. As only the richest 1000 households would be taxed, the usual criticisms against historic wealth taxes – administrative infeasibility, tax evasion, valuation problems, illiquid assets and a dampening of business innovation – do not hold. The proposal would include a 10 year post-emigration period under which households would remain liable for the tax, building on recent similiar changes to inheritance taxes. Given the small numbers of households involved, the tax could be implemented quickly to stop preemptive flight. Revenues remain substantial under a range of alternative assumptions regarding the tax model and behavioural responses. |
| Keywords: | Wealth taxation; Wealth inequality; Super-rich; Tax avoidance; Tax migration; UK taxation; Tax progressivity |
| JEL: | H24 H26 D31 D63 H21 |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:dbp:wpaper:046 |
| By: | Cika, Anxhelo |
| Abstract: | 2023 was, by most accounts, the year of the girl: girl dinner, girl math, Barbenheimer, and a wave of internet culture built for and about young women. Girl math went viral for its own kind of purchase “justification”: an item worn often costs less each time you wear it, and a return is basically profit, among many more. The joke was filmed straight to camera, often with a partner or friend on hand to play the “rational, ” “financially literate” counterpart to the woman's logic. It built a community as much as it drew backlash, but nobody looked closely at what the “math” was actually doing. Drawing on mental accounting, Foucauldian and institutional perspectives on accounting, feminist and postfeminist theory, and work on accounting as a gendered practice, this paper argues that girl math is not merely an instance of Thaler's mental accounting but a form of accounting in its own right: informal, local, community-driven, and performed publicly on TikTok; separated from formal accounting not by its logic, but by who is recognised as doing the counting. |
| Keywords: | accounting;girl math;governmentality;mental accounting;postfeminism;TikTok |
| JEL: | M40 |
| Date: | 2026–08–31 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:140913 |
| By: | Mauro Marè (Luiss University); Francesco Porcelli (Sapienza University of Rome); Francesco Vidoli (Department of Economics, Society & Politics, Università di Urbino Carlo Bo) |
| Abstract: | Tax expenditures are delivered through many legally distinct provisions rather than through a few salient programs. We argue that the number of provisions, not the aggregate revenue foregone, is the margin on which their political economy operates. We develop a three-agent model in which a rent-seeking firm lobbies for tax expenditures, a vote-maximizing politician chooses visible public goods, the volume of tax expenditures and the number of provisions through which they are delivered, and a Treasury official with an institutional preference for budget transparency can expose their hidden cost at the risk of political retaliation. Fiscal illusion is micro-founded as an increasing, concave function of the number of provisions, so that fragmentation is the channel through which opacity is produced. In the subgameperfect equilibrium, a stronger Treasury enforces more, and stronger enforcement reduces both the volume and the fragmentation of tax expenditures while leaving visible public goods essentially unchanged. The number of provisions has no source of variation independent of the opacity mechanism, whereas revenue foregone also reflects legitimate redistributive demand: the count of provisions is therefore a structurally cleaner signal of political capture than the aggregate fiscal magnitude, and institutional quality should discipline fragmentation more robustly than volume. The model yields three testable hypotheses for cross-country data in which provisions are counted separately from revenue foregone. |
| Keywords: | Tax Expenditures, Fragmentation, Fiscal Illusion, Lobbying, Budget Institutions |
| JEL: | D72 D78 H20 H30 H61 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:urb:wpaper:26_02 |
| By: | Ezra, Dvir Aviam |
| Abstract: | Proxy voting policies are documents used by fiduciaries to outline how institutional shareholders use their voting power in corporate votes within their portfolio companies. These policies govern tens of trillions of dollars of assets under management (AUM) in the U.S. alone. 2 However, they occupy an unstable legal position. They are treated primarily as disclosure documents but operate as private regulatory instruments. This article develops the first doctrinal taxonomy of proxy voting policies, evaluating their functions as disclosure instruments, internal guidelines, contractual undertakings, and as private regulation. This analysis is supplemented by an empirical review of disclosures of proxy voting policies showing substantial heterogeneity in disclosure quality, presence of boilerplate language, reliance on proxy advisers, and uneven substantive guidance.3 This article argues that current law under-regulates PVPs because it focuses on discretionary disclosure while ignoring their norm-setting powers. It proposes a tiered regulatory model based on proportionality and democratic legitimacy to enhance disclosure, compliance and accountability. |
| Keywords: | Disclosure Regulations, Proxy Voting, Corporate Governance, Financial Regulation, Behavioural Finance, Information Processing, Stewardship, Fiduciary Duties |
| JEL: | K22 K23 G23 G34 G38 G40 D82 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:safewp:343536 |
| By: | Azinovic-Yang, Li; Kepler, John D.; Speros, Ava E.; Stewart, Christopher R. |
| Abstract: | We study how the durability of customer relationships shapes competition, innovation, and the allocation of economic activity. Using novel data from M&A accounting disclosures, we construct a forward-looking measure of customer durability based on firms' expected useful lives of their customer relationship-related intangible assets, covering nearly 9, 500 acquisitions and $8 trillion in assets from 2002 through 2024. We document a substantial rise in durability across industries and examine its implications in an endogenous growth model in which longer-lasting customer relationships amplify incumbents' market power. Empirically, greater durability is associated with higher markups and profit shares, increased concentration, reduced entry and exit, lower job reallocation, slower wage growth, and a declining labor share. Consistent with our model, we also find an inverted-U relationship between durability and innovation, with high durability reducing both the quantity and quality of innovation, partly through lower R&D investment. Taken together, our findings highlight rising customer durability as a novel mechanism that helps reconcile the simultaneous increase in market power and decline in U.S. business dynamism, with important implications for competition policy. |
| JEL: | L11 L25 L41 O31 E25 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:cbscwp:343992 |