|
on Accounting and Auditing |
| By: | Farjaudon, Anne-Laure; Morales, Jérémy |
| Abstract: | This article examines the role of accounting in the manufacture of consensus. Consensus building is often considered a central value for rational decision-making and management. However, more than a democratic confrontation of vantage points, the quest for consensus is a way to discourage conflict and resistance. Our main argument is that accounting and consensus play central roles in processes of definition and the social reproduction of dominant interests. Accounting acts to promote some stakes and strategies (and silence others), as if they were collective and disinterested, which makes them more powerful in debates that deny struggles and asymmetries in positions of power, as well as increases legitimacy by creating an illusion of participation. We illustrate these processes through a case study in which we document the intersection between two fields of knowledge, marketing and accounting, that compete for a monopoly on the definition of value and the ability to speak for the organisation. This analysis draws on Bourdieu's conceptualisation of symbolic domination to highlight how powerful actors secure influence while avoiding contestation. Accounting produces symbolic violence that consolidates asymmetries in positions of power by shaping what is consensual and what is not so that dominant interests are reproduced with the consent of those who have most to lose in the process. |
| Keywords: | Consensus; Symbolic domination; Brand valuation; Intellectual capital; Management control; |
| JEL: | M31 M41 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:dau:papers:123456789/10730&r=acc |
| By: | Ratto, Marisa; Thomas, Richard; Ulph, David |
| Abstract: | In this paper we focus on the effects of investigations on tax compliance. Results from empirical studies suggest that the effects of audits are not only in terms of recovered unpaid tax (direct effects), but there are also indirect effects in terms of future better compliance in the rest of the community. The evidence suggests that such indirect effects tend to outweigh the direct effect. However, current policy decisions of how to allocate investigation resources across different groups of taxpayers generally neglect the indirect effects, generating a potential resource misallocation issue. With the aim to clarify a possible mechanism through which the indirect effects work and hence to inform any policy recommendations, we model tax compliance as a social norm and decompose the total effect of an increase in the audit probability into a direct effect (increased expected fine) and a multiplier effect due to taxpayers’ interdependencies. |
| Keywords: | optimal audit rule; tax evasion; social norm; opportunities to evade; |
| JEL: | D81 H26 H30 K42 |
| Date: | 2013–05 |
| URL: | http://d.repec.org/n?u=RePEc:dau:papers:123456789/4728&r=acc |
| By: | Juan Carlos Cuestas (University of Sheffield); Paulo José Regis (Xi'an Jiaotong-Liverpool University) |
| Abstract: | The role the real exchange rate plays in determining current account balances has gathered momentum as East and Southeast Asian countries have seen increasingly positive current account balances. This paper analyses the evolution of current accounts in the region. A cointegrating relationship between the real effective exchange rate and the ratio of the current account balance of the GDP is tested, based on both linear and nonlinear models. The half-life of current account imbalances is relatively short, implying high capital mobility. Results poin to the existence of a long-run relationship, and in most cases the causality runs from the exchange rate to the current account. |
| Keywords: | emerging markets, current account, half-life, East and Southeast Asia |
| JEL: | C22 E32 F15 |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:aee:wpaper:1308&r=acc |
| By: | Masahiro Enomoto (Research Institute for Economics & Business Administration (RIEB), Kobe University, Japan); Fumihiko Kimura (Tohoku University, Sendai, Japan); Tomoyasu Yamaguchi (Tohoku Gakuin University, Sendai, Japan) |
| Abstract: | The purpose of this paper is to investigate whether the level of financial development influences earnings management in an international setting. We deal with not only accrual-based earnings management but also real earnings management that affects a firm's real activities. We examine the relationship between financial development and both types of earnings management using 54,178 observations in 37 countries from 2009 to 2012. The results show that a manager is restrained in both accrual-based earnings management and real earnings management when under a higher level of financial development. The findings suggest that financial development disciplines managers and mitigates their incentives to engage in earnings management. Our interpretation of the results is that a linkage between accounting institutions and non-accounting institutions exists. |
| Keywords: | Financial development, Accounting institutions, Financial accounting, Earnings management |
| JEL: | M41 |
| Date: | 2013–11 |
| URL: | http://d.repec.org/n?u=RePEc:kob:dpaper:dp2013-34&r=acc |
| By: | Mohamed Arouri; Gazi Salah Uddin; Kishwar Nawaz; Muhammad Shahbaz; Frédéric Teulon |
| Abstract: | This paper contributes to the literature by exploring the relationship between financial development, economic growth and trade openness in case of Bangladesh over the period 1975Q1-2011Q4. The ARDL bounds testing approach to cointegtaion and the innovative accounting approach for causality are used. Our results show that financial developpemnt, trade openness and economic growth are likned over the long-run. We find evidence in favor of the supply-side hypothesis while financial development and economic growth cause exports. Economic growth causes imports and feedback effect exists between trade openness and economic growth. |
| Keywords: | Financial development, Growth, Trade openness, Bangladesh |
| Date: | 2013–10–15 |
| URL: | http://d.repec.org/n?u=RePEc:ipg:wpaper:37&r=acc |
| By: | Mao, Y.; Renneboog, L.D.R. (Tilburg University, Center for Economic Research) |
| Abstract: | Abstract: To address the question as to whether managers manipulate accounting numbers downwards prior to management buyouts (MBOs), we implement an industry-adjusted buyout-specific approach and receive an affirmative answer. In UK buyout companies, negative earnings manipulation (understating the earnings prior to the deal) often occurs, both by means of accrual management and real earnings management. We demonstrate that MBOs are significantly more frequently subject to negative manipulation than leveraged buyouts (LBOs). In non-buyout firms, positive earnings management frequently occurs because it affects managers’ bonuses and the likelihood of meeting or beating analysts’ expectations which may trigger a positive market reaction. By means of an instrumental variables approach, we examine competing incentives affecting the degree and size of earnings manipulation. Our evidence implies that the (ex ante) perceived likelihood that an MBO will be undertaken has a strong significant effect on negative earnings management, while the external borrowing capacity of the buyout company is not determined by standard capital structure factors, such as earnings numbers. The implementation of the revised UK Corporate Governance Code of 2003 has somewhat reduced the degree of both accrual earnings and real management in MBOs, but since then other manipulation techniques (related to production costs and asset revaluations) are more frequently used, which may be induced by the fact that these manipulation methods are more difficult to detect. |
| Keywords: | Accounting manipulation;earnings management;leveraged buyout;management buyout;LBO;MBO |
| JEL: | G30 G32 M41 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:kubcen:2013055&r=acc |
| By: | Robert Stehrer (The Vienna Institute for International Economic Studies, wiiw) |
| Abstract: | Abstract The increasing international fragmentation of production has triggered the development of a number of widely used indicators accounting for value added flows in the world economy. This paper generalises these measures by simultaneously considering the import side and focusing on bilateral gross and value added trade flows. It discusses how these indicators relate to each other, the role of double counting in bilateral value added trade, and aggregation issues in global value added flows. Using the World Input-Output Database (WIOD) selected results on bilateral value added trade for the EU 27 countries, the United States and China over the period 1995-2011 are presented. |
| Keywords: | production fragmentation, value added trade, vertical specialisation, bilateral trade |
| JEL: | F1 F15 F19 |
| Date: | 2013–05 |
| URL: | http://d.repec.org/n?u=RePEc:wii:wpaper:101&r=acc |
| By: | Chaton, Corinne; Durand-Viel, Laure |
| Abstract: | Real assets are usually valued by computing the stream of profits they can bring to a price-taking firm in a liquid market. This method ignores market fundamentals by assuming that all the relevant information is included in the spot price. Our article analyses the bias resulting from such an approach when the market is imperfectly competitive. We propose a stylised two-period model of the natural gas market with no uncertainty, focusing on strategic interactions between two types of oligopolistic players—pure traders and suppliers with downstream customers—who have access to storage. We show that the true value of storage capacity is not the same for traders and for suppliers. Comparing the latter value with the traditional price-taking valuation reveals a systematic bias that tends to induce underinvestment. |
| Keywords: | Assets (accounting); profit; gas industry; spot prices; suppliers; natural gas; |
| JEL: | L16 G14 G12 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:dau:papers:123456789/11439&r=acc |
| By: | Carla Canelas (Centre d'Economie de la Sorbonne); François Gardes (Centre d'Economie de la Sorbonne); Silvia Salazar (Centre d'Economie de la Sorbonne) |
| Abstract: | In this article, we propose a new method to estimate price effects on micro cross-sectional data using full prices that take into account household domestic production. We use behavioral microsimulations by subpopulations to analyze the redistributive impact of changes on Value Added Tax (VAT) rates in Ecuador and Guatemala. Utility analysis is used to evaluate the consequences on households welfare caused by these tax reforms. The proposed model solves the crucial problem of price data availability in developing countries. The estimates of the full price elasticities highlight the importance of the substitution between time and monetary expenditures within the households domestic production function and show that traditional approaches only tell half of the story. In general, the utility estimates seem to be consistent as they have the expected sign and follow the same pattern of changes in consumption. |
| Keywords: | Consumer demand, full prices, microsimulation, taxes, time-use, welfare. |
| JEL: | D04 D11 D12 D13 |
| Date: | 2013–07 |
| URL: | http://d.repec.org/n?u=RePEc:mse:cesdoc:13061&r=acc |
| By: | European Commission (European Commission) |
| Abstract: | The 2013 edition of the report ‘Tax reforms in EU Member States’ contributes to the tax policy debate in the EU. Compared to previous editions, the report has been streamlined with a stronger focus on the Member State level. The report consists of two parts: (i) an extensive overview of recent tax reforms, and (ii) a discussion of selected tax policy challenges relevant for improving Member States’ tax systems in two analytical chapters. The chapter on recent tax reforms identifies common trends across countries and offers a typology of reforms consistent with the main messages of the European Semester. The first analytical chapter focuses on two wide ranging challenges that EU Member States are facing in the area of tax policy in times of slow growth and high fiscal consolidation needs: the potential contribution of taxation to consolidate public finances – in addition to expenditure control – and the growth-friendliness of the tax structure. Beside updating and refining last year's horizontal screening, various checks have been carried out to see how robust the results are. The second analytical chapter deals with economic challenges that EU Member States are facing with respect to the design of individual taxes and tax compliance. It deepens the analysis of tax expenditure with particular insights on personal income taxation and examines the debt bias in corporate taxation, notably its effects on banks’ capital structures. Applying an indicator-based approach, the report then provides an update of the analysis carried out in previous years on broadening the VAT base, on housing taxation, on environmental taxation and on improving tax governance. Finally, the chapter analyses the influence of taxation on income inequality. |
| Keywords: | European Union, Taxation, European Semester, VAT, Coporpotate income tax, tax administration, tax reform |
| JEL: | H21 H22 H23 H25 H27 H62 |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:tax:taxpap:0038&r=acc |
| By: | Norman Gemmel (Victoria University of Wellington, New Zealand); Richard Kneller (University of Nottingham, UK); Danny McGowan (Bangor University, UK); Ismael Sanz (Universidad Rey Juan Carlos, Spain) |
| Abstract: | Firms that lay far behind the technological frontier have the most to gain from imitating the technology or management practices of others. That some firms converge relatively slowly to the productivity frontier suggests the existence of factors that cause them to under-invest in their productivity. In this paper we explore whether higher rates of corporate taxation affect firm productivity convergence because they reduce the after tax returns to productivity enhancing investments for small firms. Using data for 11 European countries we find evidence for such an effect; productivity growth in small firms is slower the higher are high corporate tax rates. Our results are robust to the use of instrumental variable and panel data techniques with quantitatively similar effects found from a natural experiment following the German tax reforms in 2001. |
| Keywords: | Productivity, taxation, convergence |
| JEL: | D24 H25 L11 O31 |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:bng:wpaper:13001&r=acc |
| By: | Kevin S. Markle; Douglas A. Shackelford |
| Abstract: | We examine effective tax rates (ETRs) for 9,022 multinationals from 87 countries from 2006 to 2011. We find that, despite extensive investments in international tax avoidance, multinationals headquartered in Japan, the U.S., and some high-tax European countries continue to face substantially higher worldwide taxes than their counterparts in havens and other less heavily taxed locations. Other findings include: (a) Effective tax rates remained steady over the investigation period; (b) Entering a tax haven country for the first time results in a slight reduction in the firm’s ETR; (c) ETR changes vary depending on whether the subsidiary is a financial conduit or an operating subsidiary. These results should aid ongoing international tax policy debates and expand scholars’ understanding about the taxation of multinationals. |
| JEL: | F23 H25 H26 |
| Date: | 2013–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:19621&r=acc |
| By: | Michelle Harding |
| Abstract: | This paper provides an overview of the differing ways in which capital income is taxed across the OECD. It provides an analytical framework which summarises the statutory tax treatment of dividend income, interest income and capital gains on shares and real property across the OECD, considering where appropriate the interaction of corporate and personal tax systems. It describes the different approaches to the tax treatment of these income types at progressive stages of taxation and concludes the discussion of each income type by summarising the different systems in diagrammatic form. For each income type, the paper presents worked calculations of the maximum combined statutory tax rates in each OECD country, under the tax treatment and rates applying as at 1 July 2012. These treatments and rates may have changed since this date and the paper should not be interpreted as reflecting the current taxation of capital income in OECD countries. Ce document donne un aperçu des diverses formes d’imposition des revenus du capital dans les pays de l’OCDE. Il offre un cadre d’analyse qui résume le traitement fiscal légal des dividendes, des intérêts perçus et des plus-values réalisées sur les actions et sur les biens immobiliers dans les pays de l’OCDE, en tenant compte le cas échéant de l’interaction entre le régime de l’impôt sur les sociétés et celui de l’impôt sur le revenu des personnes physiques. Il décrit les différentes approches du traitement fiscal de ces types de revenu à différents niveaux du barème progressif et conclut l’analyse de chaque type de revenu par des diagrammes qui résument les différents systèmes existants. Pour chaque type de revenu, ce document présente des calculs élaborés des taux maximums d’imposition combinés en vigueur dans chaque pays de l’OCDE, en fonction du régime fiscal et des taux applicables au 1er juillet 2012. Ces régimes et taux ont peut-être été modifiés depuis cette date, de sorte que ce document ne reflète pas nécessairement la situation actuelle de la fiscalité des revenus du capital dans les pays de l’OCDE. |
| Date: | 2013–11–07 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ctpaaa:19-en&r=acc |
| By: | Annette Alstadsæter; Wojciech Kopczuk; Kjetil Telle |
| Abstract: | In 2004 Norwegian authorities announced a reform introducing dividend taxation for personal (but not corporate) owners to take effect starting in 2006. This change provided incentives to maximize dividends in 2004 and 2005, and to retain earnings in the following years. Using Norwegian registry data that cover the universe of non-publicly traded firms, we find that dividend payments responded very strongly to the anticipated reform, but also that much of the response was compensated by re-injecting shareholder equity in the same firms. On the other hand, following the reform firms began to retain earnings. While all categories of assets grow, the increase in durable assets categories that include equipment, machinery, company cars, planes and boats, is particularly striking. We find that personally owned firms and those that pursued aggressive dividend maximization policy in anticipation of the reform exhibit lower profits and economic activity in its aftermath, but retain earnings and accumulated assets at comparable or faster rate than others. The differential effect on assets is concentrated in financial (a potential substitute for private saving) and durable (a potential substitute for private consumption) asset categories.We interpret these results as indicating both the existence of real tax responses and supportive of the notion that in the presence of dividend taxation closely-held firms partially serve as tax shelters. |
| JEL: | D22 G3 H2 H3 |
| Date: | 2013–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:19609&r=acc |
| By: | Eric J. Brunner (University of Connecticut); Stephen L. Ross (University of Connecticut); Rebecca K. Simonsen (Columbia University) |
| Abstract: | Many economists have cited fiscal illusion as an argument against specific types of taxes arguing that less visible taxes may cause voters to systematically underestimate the true burden of taxation. The higher willingness of renters to support an increase in the property tax, often referred to as renter illusion, is often used as one of the classic examples of fiscal illusion. In this paper we use detailed micro-level survey data of registered voters in California to provide new evidence on the renter illusion hypothesis. The survey data contains voter responses to two key questions: 1) their willingness to pay higher property taxes to expand funding for public services and 2) their willingness to pay higher sales taxes to fund those services. Using a difference-in-differences estimation strategy to control for individual specific preferences for public service spending, we find first that renters are approximately 10 to 15 percentage points more likely than homeowners to favor a property tax increase over a sales tax increase to fund public services. However, further analysis indicates that our results are not driven by the voting behavior of renters. Results based solely on the sample of renters indicate that renters are indifferent between a property tax increase and a sales tax increase. In contrast, homeowners strongly oppose a property tax increase relative to a sales tax increase. These results cast doubt on the strong version of the renter illusion hypothesis that suggests renters believe they do not pay the property tax. Further analysis reveals that the strong opposition among homeowners to the property tax is not associated with the relative tax burden faced by homeowners. Examining the variation in tax burden created by Proposition 13 in California, we find that homeowner aversion to the property tax does not increase with the homeowner’s relative tax burden. These findings of homeowner aversion to property taxes are consistent with recent work suggesting that salience matters when voters evaluate taxes, but also suggest that increased salience does not necessarily lead to more careful consideration of individual tax burdens. |
| Keywords: | fiscal illusion, renter effect, tax salience, tax burden, property tax |
| JEL: | H2 H7 R5 |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:uct:uconnp:2013-30&r=acc |
| By: | Till Gross (Department of Economics, Carleton University) |
| Abstract: | I analyze international tax competition in a framework of dynamic optimal taxation for strategically competing governments. The global capital stock is determined endogenously as in a neo-classical growth model. With perfect commitment and a complete tax system (where all factors of production can be taxed), governments set their capital taxes so that the net return is equal to the social marginal product of capital. Capital accumulation thus follows the modified golden rule. This is independent of relative country size, capital taxes in other countries, and the degree of capital mobility. In contrast, with an exogenous capital stock returns on capital are pure rents and a government's ability to capture them is limited through capital fight, triggering a race to the bottom. With an endogenous capital stock, capital is an intermediate good and taxes on it are not used to raise revenues, but to implement the optimal capital stock. Even in a non-cooperative game it is thus not individually rational for governments to engage in tax competition. I provide a general proof that if the modified golden rule holds in a closed economy, then it also does in an open economy. |
| Keywords: | Tax Competition, Open Economy, Capital Taxes, Capital Mobility, Ramsey Taxation, Optimal Dynamic Taxation |
| JEL: | F42 H21 H87 E6 |
| Date: | 2013–10–21 |
| URL: | http://d.repec.org/n?u=RePEc:car:carecp:13-08&r=acc |