Tax enforcement and tax havens under formula apportionment

In this paper, we consider optimal tax enforcement policy in the presence of profit shifting toward tax havens. We show that, under separate accounting, tax enforcement levels may be too high due to negative fiscal externalities. In contrast, under formula apportionment, tax enforcement is likely to be too low due to positive externalities of tax enforcement. Our results challenge recent contributions arguing that, under formula apportionment, there is a tendency toward inefficiently high levels of (effective) tax rates.     

Family ownership and firm performance: Empirical evidence from Western European corporations

This paper empirically examines how family-controlled firms perform in relation to firms with nonfamily controlling shareholders in Western Europe. The sample consists of 1672 non-financial firms. Active family control is associated with higher profitability compared to nonfamily firms, whereas passive family control does not affect profitability. Active family control continues to outperform nonfamily control in terms of profitability in different legal regimes. Active and passive family control is associated with higher firm valuations, but the premium is mainly due to economies with high shareholder protection. The benefits from family control occur in nonmajority held firms. These results suggest that family control lowers the agency problem between owners and managers, but gives rise to conflicts between the family and minority shareholders when shareholder protection is low and control is high.     

Small business tax policy and informality: evidence from Georgia

Using a panel of administrative data and regression discontinuity analysis, this paper examines how the introduction of preferential tax regimes for Georgian micro- and small businesses in 2010 affected formal firm creation and tax compliance. The results show that the new tax regime for micro-businesses increased the number of newly registered firms by 27–41 % below the eligibility threshold during the first year of the reform, but not in subsequent years. We do not find an effect of the new tax regime for small businesses on formal firm creation in any year. Policy makers are often also concerned about abuse risks stemming from differentiated tax treatment of micro- and small businesses. The analysis in this paper reveals reduced tax compliance among small taxpayers for multiple years after the reform and among micro-business taxpayers only during the first year of the reform.     

Family firms,tax avoidance,and socioemotional wealth: evidence from tax reform in Taiwan

Review of Quantitative Finance and Accounting - In 2018, Taiwan implemented a tax reform package that abolished the imputation regime, providing managers stronger incentive to engage in tax...     

Political fragmentation and projected tax revenues: evidence from Flemish municipalities

The level of revenues pocketed by a government during the fiscal year often deviates from that projected by this government in its budget. Despite a flourishing literature on, for example, the technical or procedural determinants of such forecast errors, little is yet known about how political stratagems may affect forecast errors. In the present paper, we analyse whether differences in the level of government fragmentation are useful in explaining local government tax revenue forecast errors—controlling for various other factors. Using data on 242 Flemish municipalities for the period 1992–2002, we find that two-party governments are more optimistic than single-party governments. In contrast to our initial expectations, governments with at least three parties are significantly more careful (or less optimistic) in their revenue projections than single- or two-party governments.      

Determinants of tax haven utilization: evidence from Australian firms

This paper examines the major determinants of tax haven utilization based on a sample of 200 publicly listed Australian firms, over the 2006–2010 period (1,000 firm‐years). Our regression results show that variables relating to transfer pricing, intangible assets, an interaction term between transfer pricing and intangible assets, withholding taxes, performance‐based management remuneration and multinationality are positively associated with tax haven utilization. We also find that corporate governance structures are negatively associated with tax haven utilization. The magnitude and significance of the regression coefficients indicate that transfer pricing, withholding taxes, intangible assets, an interaction term between transfer pricing and intangible assets, corporate governance and multinationality are the most important drivers of tax haven utilization.     

Corporate tax reforms and tax-motivated profit shifting: evidence from the EU

This paper examines whether the profit-shifting trend in Europe during 2003–2013 can be explained by tax policy changes. Consistent with prior literature, we find that affiliates’ profits are sensitive to tax rate changes. However, we document that tax base–broadening reforms have mitigated the incentives for both inward and outward profit shifting. In particular, we find that anti-avoidance rules prevent multinational companies from shifting profits out of their foreign affiliates, whereas other tax base–broadening rules, such as restrictions on the deductibility of tax losses or on group tax relief, reduce the incentives for multinational companies to shift profits into foreign affiliates. Furthermore, we find evidence of a downward trend in profit shifting across European countries, especially when the tax enforcement is stricter. Overall, these results suggest that broader tax bases and stricter tax enforcement have successfully curbed this particular tax strategy.     

VAT threshold and small business behavior: evidence from Thai tax returns

International Tax and Public Finance - This paper examines how small firms respond to the VAT registration threshold in the context of high informality. Using the panel of VAT and corporate income...     

Government ownership,corporate governance and tax aggressiveness: evidence from China

This study investigates how government ownership and corporate governance influence a firm's tax aggressiveness. Using Chinese listed companies during 2003–2009, we find that compared with government‐controlled firms, non‐government‐controlled firms pursue a more aggressive tax strategy. In particular, non‐government‐controlled firms with a higher percentage of the board shareholdings and with a CEO who also serves as the board chairman are more aggressive. For government‐controlled firms, we find that board shareholding has an impact on tax aggressiveness and it does not differ between local and central government‐controlled firms. However, local government‐controlled firms in less developed regions where the implementation of corporate governance measures is generally less effective are more tax aggressive than those in other regions.     

Married couple work participation and earnings elasticities: evidence from tax data

This paper uses administrative tax panel data to estimate work participation and earnings elasticities of married couples by exploiting variation in tax policy. Not only may individuals alter labor supply by working more or less in response to changes in tax policy, they may also alter reported earnings or shift income between taxable and tax-deferred compensation. As a result, in addition to estimating the standard extensive and intensive labor supply elasticities, we also examine elasticities by type of income (wage earnings vs. self-employment earnings) and compensation (taxable vs. tax-deferred). We find that wives have more elastic work participation and earnings than husbands. Furthermore, self-employment income is more responsive to net-of-tax price changes than wage earnings for both husbands and wives, suggesting that it is easier for the self-employed to alter their work hours, work intensity, and/or reported income than wage earners. Finally, we find that wives respond to changes in the net-of-tax price of earnings by altering the amount of earnings subject to current-year taxes through adjustments of tax-deferred contributions to employer-provided retirement accounts.     

增值税核算与列报的思考

会计核算和列报的基本功能是全面、及时和准确反映会计主体的所有经营活动.但是,增值税的核算和列报未能准确反映会计主体代收、代付和代交增值税税款以及自行缴纳的基本特征,也未能反映会计主体增值税税款资金运行的基本特征.本文试图从企业法人财产权角度思考目前增值税核算与列报改革的方向和具体措施,以期能够为完善增值税制度提供一点帮助.     

Determinants and implications of long audit reporting lags: evidence from China

Audit reporting lag is the single most important determinant influencing the timeliness of the release of financial statements. In this study, we first explore the determinants of audit reporting lags in China where the audit market for listed firms is dominated by non-Big 4 auditors. We then examine the implications of long audit reporting lags in subsequent years. We find that selected measures of audit risk and complexity, and auditor expertise are all associated with the length of audit reporting lags in China. Firms with long audit reporting lags are more likely to have the receipt of non-standard opinions in subsequent periods. There is also evidence that firms with extremely long audit reporting lags tend to have more restatements in the subsequent year. As prior research has not specifically investigated the consequences of long audit reporting lags in subsequent years, this study makes an important contribution to the literature in this area.     

RETRACTED: User's perception of corporate reporting: evidence from Saudi Arabia

This article has been retracted by the Editors in response to the findings of an Investigation Panel appointed by Cardiff University.Reason: The Investigation Panel of Cardiff University concluded that the article made unauthorised use of the original thought and findings of Abdulrahman M.H. Alrazeen (1999), The Quality of Annual Financial Reports of Saudi Corporations: Users' Perceptions and Companies' Practices, Ph.D. Thesis, Cardiff University. The Investigation Panel also concluded that “…the striking similarities in the text and narrative were the result of plagiarism.”     

Technically the king can do wrong in reorganizing insolvent corporations: evidence from Canada

Taken together the international move from liquidation to reorganization‐based bankruptcy regimes and the international move to abolish Crown priority in bankruptcy provide Canada with an opportunity to rethink Crown priority in bankruptcy. This paper makes the case that abolishing Crown priority in bankruptcy in Canada is optimal given a revaluation of traditional normative claims surrounding Crown priority in the context of a bankruptcy system that favours reorganization when possible. While this paper focuses on Canada, it engages in a normative assessment that may be useful for possible reforms to Crown priority in the United States and in other jurisdictions that, like Canada, have been influenced, not only by the English model, but also by the American bankruptcy and reorganization system. Copyright © 2004 John Wiley & Sons, Ltd.     

The revenue and base effects of local tax hikes: evidence from a quasi-experiment

Due to a reform of the local equalization scheme in 2003, a set of municipalities in the German state of North Rhine-Westphalia (NRW) increased their local property and business tax rates by one to two percentage points, while the remaining municipalities kept their rates constant. I use this variation across municipalities and over time to study the revenue and base effects of local property and business tax hikes in a generalized difference-in-differences design. The results suggest that the property tax hikes had even in the long-run a revenue elasticity of unity. Accordingly, I find no adverse effects on property tax bases. For the business tax, I find no significant effects on revenues and bases. Furthermore, there are also no effects on broader economic outcomes such as local employment, firms’ wage bill, and property prices. Overall, increasing local tax rates by one to two percentage points does not seem to affect the local economy adversely.

     

Media negativity bias and tax compliance: experimental evidence

We study the impact of the media negativity bias on tax compliance. Through a framed laboratory experiment, we assess how the exposure to biased news about government action affects compliance in a repeated taxation game. Subjects treated with positive news are significantly more compliant than the control group. Instead, the exposure to negative news does not prompt any significant reaction compared to the neutral condition, suggesting that participants may perceive the media negativity bias in the selection and tonality of news as the norm rather than the exception. Overall, our results suggest that biased news provision is a constant source of psychological priming and plays a vital role in taxpayers’ compliance decisions.

     

Loan collateral and financial reporting conservatism: Chinese evidence

We examine the relation between the use of collateral and financial reporting conservatism for a sample of Chinese firms. In the absence of flexibility in risk pricing through interest rates and strong contract enforcement in China, we find that lenders reduce collateral requirements from more conservative borrowers and that this negative relation is significantly moderated by borrowers’ poor credit quality and low asset tangibility. Our finding that conservatism can result in a tangible benefit in the form of lower collateral requirements indicates that lenders value financial reporting conservatism. However, the benefit from financial reporting conservatism is muted as lenders become more concerned about borrowers’ default risk or ability to pledge tangible assets as collateral against loans.     

Convergence of accounting standards and financial reporting externality: evidence from mandatory IFRS adoption

Using mandatory adoption of International Financial Reporting Standards (IFRS) as a natural experiment, we examine whether reporting externalities can be magnified when financial disclosures are based on a common set of accounting standards. Specifically, we investigate and find that the changes in publicly available information of mandatory IFRS adopters (due to the convergence of accounting standards) can impact the investment efficiency of prior voluntary adopters. While we document positive externalities of mandatory IFRS, we also observe heterogeneity in these spillover effects at the firm and the country level, suggesting that externalities increase with improvements in the comparability of accounting information.