The relationship between LNG price, LNG revenue, non-LNG revenue and government spending in China: An empirical analysis based on the ARDL and SVAR model

The present paper examines the dynamic relationship between liquefied natural gas (LNG) price, LNG revenue, non-LNG revenue and government spending (GOVS) in China using autoregressive distributed lag (ARDL) and structural vector auto-regressive (SVAR) model. The goal of carrying out ARDL and SVAR together is to consolidate and strengthen the consistency of the results obtained from both approaches. ARDL results show that a positive influence relationship between both short-run and long-run LNG prices, LNG revenue, non-LNG revenue and GOVS, but there was no significant relationship between LNG price and GOVS. The SVAR also substantiates the results of ARDL test and provides further insight which shows that long-run fiscal synchronization hypothesis is evidenced between the LNG revenue and GOVS, while spend-tax hypothesis exists in the long-run between GOVS and non-LNG revenue. It is also evidenced that there is a complementary relationship between LNG revenue and non-LNG revenue, but this complementary role is stronger than the substitution role. Since non-LNG revenue has a greater impact on GOVS in the short-run, and the impact of LNG prices and LNG revenue on GOVS in the long-run increases over time, thus, GOVS mitigates the direct impact of non-LNG revenue to some extent, and that an appropriate allocation of spending in the non-LNG industry will have a positive impact on the development of the market economy supporting the Keynesian and spend-tax hypothesis.

Taxes, Mispricing, or the Agency Cost of Managerial Discretion? Evidence from Corporation to REIT Conversions

We study the effect of change in the organizational structure from a corporation to a real estate investment trust (REIT) on the firm value. Changing the organizational structure from a corporation to a REIT could result in an increase in the firm value, and some companies may be motivated to change their organizational structure because of this. We examine three possible sources of gains in the firm value from such a change in the organizational structure. They are the potential tax savings, reduction in agency costs of managerial discretion, and increase in the price multiples after the conversion. We examine the changes in the firm value of firms that announce conversion to a REIT during 1990–2016. We find that the announcement period returns are positive and strongly significant. Consistent with the tax hypothesis, the announcement period returns are positively related to the effective tax rate of the sample firms. Consistent with the managerial discretion hypothesis, the announcement period returns are positively related to the level of free cash flow of low growth firms. Consistent with the mis-valuation hypothesis, the announcement period returns are higher when REIT valuations are higher relative to the sample firms.

Implicit Taxes Amid Race to the Bottom in a Global Tax Game

Growing tax competition among national governments in the presence of capital mobility distorts equilibrium in the international corporate tax market. This paper is related to the literature that examines impact of international tax policies on corporate accounting statements. Employing international firm-level data, this study revisits the race-to-the-bottom hypothesis and documents that tax exemptions lowering effective tax rates relative to statutory rates increase pre-tax returns. This finding directly contradicts the implicit tax hypothesis documented by Wilkie (1992), who provided empirical evidence on inverse relationship between pre-tax return and tax subsidy. We also find evidences that relative importance of permanent versus timing component depends on the geography and that decline in corporate tax rates reduces impact of tax subsidies on profitability. Our findings suggest that tax subsidies play a different role than in 1968-1985, which was examined by Wilkie (1992). These results are consistent with the race-to-the-bottom hypothesis and income shifting explanation

Implicit Taxes Amid Race to the Bottom in a Global Tax Game

Growing tax competition among national governments in the presence of capital mobility distorts equilibrium in the international corporate tax market. This paper is related to the literature that examines impact of international tax policies on corporate accounting statements. Employing international firm-level data, this study revisits the race-to-the-bottom hypothesis and documents that tax exemptions lowering effective tax rates relative to statutory rates increase pre-tax returns. This finding directly contradicts the implicit tax hypothesis documented by Wilkie (1992), who provided empirical evidence on inverse relationship between pre-tax return and tax subsidy. We also find evidences that relative importance of permanent versus timing component depends on the geography and that decline in corporate tax rates reduces impact of tax subsidies on profitability. Our findings suggest that tax subsidies play a different role than in 1968-1985, which was examined by Wilkie (1992). These results are consistent with the race-to-the-bottom hypothesis and income shifting explanation

On the Fiscal Policy in Malaysia: An Econometrical Analysis Between the Revenue – and Expenditure

This study aims to assess the relationship between government spending and government revenue in Malaysia. The study of the causal relationship between revenue and public expenditure has important implications for the choices of fiscal policies in the field of public finances. So, this study uses annual data for the period between 1985 - 2016 with Zivot and Andrews (1992) methods and Granger causality tests. Our results sustain the spend-and-tax hypothesis highlights how the increase in tax pressure is the wrong method to contain budget deficits. In fact, in addition to reducing the disposable income of households, a tax policy of this type would reduce savings. Therefore, also the investment. All this would hurt Malaysia’s economic growth.

The effect of tax planning, company value, and leverage on income smoothing practices in companies listed on Jakarta Islamic Index

<p><strong>Purpose</strong> - The purpose of this paper is to identify the effect of tax planning, company value, and leverage on income smoothing practice in companies listed on the Jakarta Islamic Index for the period 2010-2017.</p><p><strong>Method</strong> - The data in this study consisted of 12 companies listed on the Jakarta Islamic Index for the period 2010-2017. Samples are selected using the purposive sampling method. Eckel Index classification uses two types of earning as the target of incomee smoothing, namely operating income and income before tax. Hypothesis testing uses a logistic regression analysis model.</p><p><strong>Result</strong> - Result of simultaneously logistic regression tests tax planning, company value, and leverage affect income smoothing. And results of the partial logistic regression test of company value variable have a significant effect on income smoothing practices, while the tax planning and leverage variables have no significant effect on income smoothing practices.</p><p><strong>Implication</strong> - This study proves that tax planning, corporate value, and leverage simultaneously have a significant effect on income smoothing practices but partially not so that there are many variables that play a role.</p><p><strong>Originality</strong> - The research is the first study that describe use sharia relate income smoothing.</p>

THE EX-DIVIDEND-DAY BEHAVIOR OF STOCK PRICES AND VOLUME: THE CASE OF PHARMACEUTICAL DIVIDEND ARISTOCRATS

This paper presents the wide analysis of the profitability factors of dividend capture strategy on public pharmaceutical companies within a five-year period after the global financial crisis 2008. We investigate the abnormal return and trading volumes with event study, and the effect of price changes around the ex-dividend date under the influence of various factors. Our findings suggest that there are no abnormal trading volumes on both the [Formula: see text] day of the event window and the day of the event on a subsample of companies that do not declare a dividend before the register close date. We confirm the negative stock yield on the ex-dividend day in most markets. We further confirm the tax hypothesis explaining the behavior of the share price and note the specific behavior of stock prices in the ex-dividend date for companies that do not disclose information on future payments (Japan and South Korea) and on emerging markets. The positive average cumulative abnormal return is statistically significant only for companies with a share of R&D/Total revenue [Formula: see text]3%. For companies with a value of more than 3%, the return is negative. An anomaly in the pharmaceutical stock market behavior in the ex-dividend date for 2016 is documented in our paper. A statistically significant price increase is registered both without taking into account the general market behavior, and taking into account market and individual expected return for each share of the sample. The cumulative abnormal returns are greater for pharma companies with a total enterprise value more than $1 billion, except for 2016.

Fiscal Policy And Economic Growth In PIIGS Countries: An Empirical Assessment

This paper studies the dynamic relationships between government revenues, government expenditures and economic growth in Portugal, Italy, Ireland, Greece and Spain (PIIGS henceforth). To this end we use a multivariate econometric model based on the Toda-Yamamoto (1995) procedure. Our empirical results reveal a bidirectional relationship between government revenues and government expenditures in Portugal only. Greece is the only county in which government expenditures Granger cause government revenues. Therefore, there is no evidence for spend-and-tax hypothesis for three countries of our sample. For Italy there is a unique unidirectional relationship running from government revenues to GDP while a unique unidirectional relationship was found running from government revenues to government expenditures for Ireland. Results for Spain show a double bidirectional relationships running from government revenues to GDP and from government expenditures to GDP. Moreover, there exists a unidirectional causal relationship between government revenues and government expenditures. Again, there is no evidence for tax-and-spend hypothesis for three countries of our sample.

Budget Balance through Revenue or Spending Adjustment: Evidence from Pakistan

Government cannot roll over the debt forever (ponzi game is not allowed). In the long run, inter-temporal budget constraint has to be satisfied, which is possible either through government spending adjustment or increasing government revenues. So current budget deficit calls for adjustment, in the future, in spending or revenues. There are four hypotheses, in the literature, in this regard: the tax-and-spending hypothesis, the spending-and-tax hypothesis, bi-directional causality between government revenues and government expenditures, and independence of taxes and expenditures hypothesis. The last hypothesis, however, have negative implications, in the long run, in terms of debt sustainability and inflation