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on Accounting and Auditing |
| By: | Alessandro Chiari (Charles University & Czech National Bank, Czech Republic) |
| Abstract: | This paper examines whether the Pillar Two Global Minimum Tax reduces bank profitability and regulatory capital, and for which banks the effects are strongest. We use a quarterly exposure-based differencein differences design around 2024Q1, where treatment intensity is defined by pre-2024 low-tax exposure among in-scope banks. The analysis uses a quarterly bank-level panel for 2014-2024 and exploits predetermined cross-sectional heterogeneity in low-tax exposure while controlling for bank and quarter fixed effects. The headline estimates show that post-2024 profitability and capital buffers decline more for high-exposure banks: profit after tax falls by about 2.2 basis points of assets per quarter and Tier 1 buffers by about 0.09 percentage points in the baseline specification. Higher low-tax exposure is not interpreted as vulnerability per se. The downside channel is concentrated where high pre-reform low-tax exposure coincides with limited initial capital headroom: event-study, placebo, matched-sample, and split-sample evidence all point to larger post-2024 capital-buffer compression for thin-buffer banks. Overall, the results indicate modest average effects but meaningful tail risk for banks that combine high minimum-tax exposure with thin initial capital buffers. |
| Keywords: | Firm Behaviour, International Banking, Tax Havens, Country-by-Country Reporting |
| JEL: | F23 G21 H22 H32 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:fau:wpaper:wp2026_09 |
| By: | Jay A. Soled (Rutgers Business School); James Alm (Tulane University) |
| Abstract: | “Cash is king” is a long-standing mantra among many businesspeople. It has a less favorable aura in the tax compliance world, where cash is often used to circumvent one’s tax reporting obligations. This analysis explores the current role of cash in today’s economy and suggests reasons why Congress should curtail its use or, at the very least, promote other forms of payment. |
| Keywords: | Tax compliance; tax gap; credit cards; cash; cryptocurrencies; third-party information; nudges |
| JEL: | H2 H26 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:tul:wpaper:2607 |
| By: | James Alm (Tulane University); Jubo Yan (Lingnan College, Sun Yat-sen University); William D. Schulze (Cornell University); Melissa Vigil (Internal Revenue Service); Carrie von Bose (Public Company Auditing Oversight Board) |
| Abstract: | What tax preparer characteristics are most important to taxpayers in their decision to use a tax preparer, and how does this choice of a tax preparer affect subsequent taxpayer compliance? We use laboratory experiments to examine these questions. We find that individuals in this environment simultaneously choose a preparer and their compliance based in part on factors predicted by the standard expected utility theory of individual behavior under uncertainty. However, we find that factors based on psychological considerations –- which we refer to as “behavioral factors” -– also play an important role in this setting: participants prefer tax preparers who are “credentialed, ” even when the cost is high or the credential has no impact on outcomes; participants fear an audit, regardless of its likelihood; participants often choose high-cost preparers even when they are fully compliant; and many participants forego substantial expected earnings rather than underreport income. |
| Keywords: | tax compliance; tax preparer; experimental economics; expected utility theory; behavioral economics |
| JEL: | H2 H26 C91 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:tul:wpaper:2606 |
| By: | Brandon Pecoraro; Nicholas C. Hoffman; Martin Lopez-Daneri; Elena C. Derby; Rachel Moore; Shannon E. Sledz |
| Abstract: | Using a panel of confidential corporate tax returns, we provide the first direct estimates of the realized present value of corporate tax benefits from R&D credits and deductions in the United States. Realized tax benefits can deviate from statutory tax benefits because firms in loss status are typically unable to fully utilize credits and deductions to offset current-year taxes and instead must carry these attributes forward. We develop a novel procedure to track the intertemporal firm-level utilization of tax attributes generated by corporate R&D spending, and find that the present value of R&D tax benefits varies substantially with firms’ loss status, age, and size. Old and large firms typically use R&D tax benefits quickly, while young firms – especially those that are small – frequently operate in loss status and use tax attributes more slowly. From 2012–2016, the average firm generated $0.41 in statutory tax benefits per dollar of R&D investment, with a realized present value of $0.36. Young and small firms in a loss position realized only $0.23 per dollar, a 44% decrease relative to the statutory benchmark. |
| JEL: | D22 H25 O30 O38 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35208 |
| By: | Soenke Sievers (Paderborn University); Christian Sofilkanitsch (Nazarbayev University, Graduate School of Business) |
| Abstract: | We survey the literature on the determinants of financial restatements in the United States. We frame our review around a managerial cost-benefit perspective: managers misreport when the expected benefits outweigh the expected costs, conditional on their personal characteristics. Accordingly, we synthesize prior findings along three dimensions: (1) managers' expected benefits of misreporting (e.g., capital-market pressure, compensation incentives), (2) managers' expected costs of misreporting (e.g., detection by auditors, regulators, or governance mechanisms), and (3) managerial characteristics that shape these costs and benefits (e.g. CEO age). A key insight from our review is that inconsistencies across studies often reflect differences in research design, particularly how "materiality" is defined, and whether determinants are measured during the misreporting period or around the year of the restatement announcement. We highlight methodological pitfalls in the use of restatement data, and outline directions for future research. Our review offers guidance for scholars, regulators, auditors, and boards seeking to better understand, measure, and ultimately reduce financial misreporting. |
| Keywords: | survey, financial restatement, audit quality, financial reporting quality |
| JEL: | G34 K22 M41 |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:asx:nugsbw:2025-07 |
| By: | Sergey Belev (RANEPA); Konstantin Vekerle (RANEPA); Sergey Sinelnikov (VAVT) |
| Abstract: | The issue of tax burden distribution among the population is frequently discussed in Russia. In particular, some authors argue that the VAT burden is regressive and advocate for expanding the list of goods subject to the reduced VAT rate. However, most of these studies focus on comparing aggregate consumption and disposable income as tax bases. This paper, by contrast, concentrates on identifying which categories of expenditure in Russia are subject to progressive or regressive VAT treatment, as such estimates can inform proposals for specific tax design reforms. To analyse the structure of VAT burden distribution, data from the Russian Longitudinal Monitoring Survey (RLMS), conducted by the Higher School of Economics, is employed. Total consumption expenditure is divided into the following categories: current consumption, expenditure on durable goods, investments in human capital, and spending on entertainment and leisure. Based on the distributional analysis, it is found that the structure of household consumption remained stable over the period from 2007 to 2019. During periods of declining income, a decrease in the progressivity of the VAT scale is observed. This is due to higher-income groups reducing their expenditure on durable goods in favour of current consumption and investments in human capital – both of which are often subject to zero or reduced VAT rates. Among all categories, only investments in human capital display a regressive VAT burden distribution. VAT design proves to be progressive for spending on leisure and entertainment, primarily due to the inclusion of expenditure on tourist trips, which are subject to the standard VAT rate. |
| Keywords: | Russian economy, tax burden, VAT, distributional analysis, disposable income, consumption expenses, investments in human capital |
| JEL: | E62 H21 H22 H24 H31 H71 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:gai:ppaper:ppaper-2025-1509 |
| By: | Bauer, Kevin; Langenbucher, Katja |
| Abstract: | Agentic artificial intelligence (AI) is increasingly used in corporate communication with investors, including drafting disclosures, answering queries, and summarizing financial information. While these systems can improve the accessibility and efficiency of public corporate communication, they also create risks for market integrity, such as inaccurate statements, unintended disclosure of sensitive information, and unequal access through personalized responses. This paper argues that existing disclosure and market-abuse frameworks remain substantively adequate but require clearer operational expectations for AI-driven communication. AI outputs delivered through issuer-controlled channels should be treated as corporate communications attributable to the issuer. A risk-based regulatory approach should therefore require governance oversight, separation of public and confidential data, safeguards against manipulation, auditable records of AI outputs, and human oversight for market-sensitive communications. Properly governed, agentic AI can enhance investor access to public information while preserving the principles of accurate, timely, and equal disclosure. |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:safepl:341102 |
| By: | Theodore E. Christensen (University of Georgia, Terry College of Business); Jens Mueller (Paderborn University); Soenke Sievers (Paderborn University); Christian Sofilkanitsch (Nazarbayev University, Graduate School of Business) |
| Abstract: | We examine whether ex ante non-GAAP reporting moderates short-window market reactions to material GAAP restatements. Based on a sample of 1, 619 U.S. restatements from 2003-2021, we find that firms reporting non-GAAP earnings in the pre-restatement quarter experience significantly less negative three-day abnormal returns around restatement announcements than GAAP-only reporters, consistent with a buffering effect. However, this effect is conditional on managers' prior non-GAAP reporting choices. High-quality non-GAAP reporting is associated with attenuated market penalties. In contrast, firms with aggressive non-GAAP reporting face more negative reactions than GAAP-only reporters - especially for revenue-related and Form 8-K restatements. Complementary evidence based on bid-ask spreads and analyst forecast revisions indicates that non-GAAP reporting tempers both information risk and cash flow revisions. Overall, our results highlight the dual role of non-GAAP disclosures as either credibility buffers or amplifiers when GAAP reporting integrity is called into question. |
| Keywords: | Non-GAAP reporting, GAAP restatements, market penalties, reporting uncertainty, disclosure credibility |
| JEL: | G14 D82 M41 |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:asx:nugsbw:2026-04 |
| By: | Bertomeu, Jeremy; Cheynel, Edwige; Hu, Peicong |
| 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. |
| Keywords: | Voluntary Disclosure, Information Processing, Noisy Communication, Certification, Auditors, Information Intermediaries, Equilibrium Multiplicity, Unraveling |
| JEL: | D43 D82 D83 M41 |
| Date: | 2026–04–27 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:128905 |
| By: | Huang, Xin |
| Abstract: | We express U.S. household financial wealth as a Financial Base times a multiplier. The Financial Base is the underlying stably measured layer: business capital excluding structures, business mortgages, household liabilities, and the net government liability position. It exceeds half of household financial wealth throughout 1960–2025 and rises every year. Scaled by consumption, the Base yields Base coverage and reveals a capital-to-liability rotation: backing shifts away from business capital and toward liabilities, especially government liabilities after 2007. For the wealth-ranked bottom 90 percent (W90), the multiplier only partly offsets the financial-assets share’s downward trend, so rising W90 financial coverage is sustained by Base coverage. |
| Keywords: | household financial wealth; Financial Accounts; household balance sheets; liabilities; public debt; wealth distribution; consumption coverage; macro-finance |
| JEL: | D31 E21 E44 |
| Date: | 2026–04–27 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:128890 |
| By: | Christian Sofilkanitsch (Nazarbayev University, Graduate School of Business) |
| Abstract: | I investigate whether investors change their responsiveness to non-GAAP earnings following the revelation of past GAAP reporting failures. Using an event-study design, I find that the earnings response coefficient (ERC) for non-GAAP earnings declines by 40.4 percent after the announcement of material GAAP restatements, suggesting that investors view non-GAAP earnings as less informative once the reliability of the underlying GAAP framework is called into question. The decline in non-GAAP ERCs is not explained by changes in delayed investor reactions or non-GAAP-related SEC comment letters. Taken together, the results are consistent with a credibility spillover across mandatory and voluntary reporting frameworks, whereby investors use GAAP signals to infer the credibility of non-GAAP earnings. My findings underscore the interconnectedness of GAAP and non-GAAP reporting and contribute to ongoing debates about the credibility of non-GAAP measures. |
| Keywords: | non-GAAP reporting, GAAP restatements, disclosure credibility |
| JEL: | G14 D82 M41 |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:asx:nugsbw:2026-06 |