How Do Private Firms Respond to Corporate Taxes

This paper investigates whether and at what extent private firms reduce the quality of their accruals in order to signal a better portrait to the bank and obtain new or larger bank loans. We measure earnings discretionary accruals of a sample of Italian private firms, testing whether new and larger bank loans are associated with a higher (lower) quality of earnings in borrowers' financial reporting. We study bank loan levels and changes and how they impact discretionary accruals and found that, surprisingly, private firms' discretionary accruals are systematically positively affected by an increase in bank loans, although they are negatively affected by the credit worthiness rating assigned to the borrowers. We find that the monitoring role of the banking system with regard to the adoption of discretionary accruals is effective only when the loan is very large. This paper may have implications for policy-makers as it contributes to the understanding of the shortcomings of the banking regulatory system. This is an extremely relevant issue since the excessive amount of non-performing loans held by Italian banks recently threatened the stability of the European Banking Union as a whole.

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Creating a market in management training for Vietnam's private firms

Small Enterprise Development ◽

10.3362/0957-1329.2001.018 ◽

2001 ◽

Vol 12 (2) ◽

pp. 20-31

Author(s):

John McKenzie

Keyword(s):

Management Training ◽

Private Firms

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Corporate Taxes and Foreign Direct Investment: An Impact Analysis

GATR Journal of Accounting and Finance Review (AFR) Vol. 4 (4) Oct-Dec 2019 - GATR Accounting and Finance Review ◽

10.35609/afr.2020.5.2(1) ◽

2020 ◽

Vol 5 (2) ◽

pp. 28-43

Author(s):

Onome Christopher Edo ◽

Anthony Okafor ◽

Akhigbodemhe Emmanuel Justice

Keyword(s):

Foreign Direct Investment ◽

Error Correction ◽

Direct Investment ◽

Impact Analysis ◽

Negative Relationship ◽

Value Added ◽

Positive Association ◽

Error Correction Model ◽

Corporate Taxes ◽

Correction Model

Objective – The purpose of this study is to investigate the effect of corporate taxes on the flow of Foreign Direct Investment (FDI) in Nigeria between 1983 and 2017. Methodology/Technique – This study adopts an ex-post facto research design. Secondary data was sourced from the World Bank Development Indicator, the Central Bank of Nigeria database, and the Federal Inland Revenue database. The research data was analyzed using the Error Correction Model (ECM). Findings – The coefficient of determination (R2) shows that approximately 77% of systematic changes in FDI are attributed to the combined effect of all of the explanatory variables used in this study. Specifically, the study concludes that Company Income Tax, Value Added Tax, and Custom and Excise Duties have a significant but negative relationship with FDI. In contrast, Tertiary Education Tax has a positive association with FDI. Further, Exchange Rate has a negative but significant relationship with FDI, Inflation had an insignificant but positive association with FDI, and GDP growth Rate and Trade Openness demonstrate a positive and significant association with FDI. Novelty – The findings of this study are distinguishable from previous studies, as it uncovers new evidence that higher Education Tax Rates influences FDI and emerging evidence on the effect of non-tax variables on FDI inflow. Type of Paper: Empirical. JEL Classification: E22, F21, H2, P33. Keywords: Corporate Taxes; Foreign Direct Investment; Error Correction Model; Nigeria; Non-Tax Variables. Reference to this paper should be made as follows: Edo, O.C; Okafor, A; Justice, A.E. 2020. Corporate Taxes and Foreign Direct Investment: An Impact Analysis, Acc. Fin. Review 5 (2): 28 – 43. https://doi.org/10.35609/afr.2020.5.2(1)

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