Earnings management in response to the introduction of the Australian gold tax

Earnings from gold mining in Australia remained tax-exempt for almost seven decades until January 1, 1991. In the early 1980s, rapid economic prosperity induced by escalated gold prices brought the Australian gold-mining industry under intense political scrutiny. Using a variant of the modified Jones model, this paper provides evidence of significant downward earnings management by Australian gold-mining firms, which is consistent with their attempts to mitigate political costs during the period from June 1985 to May 1988. In contrast, test of earnings management over a similar period in a control sample of Canadian gold-mining firms produced insignificant results. Further, empirical results are robust to several sensitivity tests performed. During the period from June 1988 to December 1990, the Australian firms were found to have engaged in economic earnings management. This is consistent with the sample firms' incentive of maximizing economic earnings immediately prior to the introduction of income tax on gold mining. The findings of this study help to understand the impact of earnings management on the efficient resource allocation in an economy. They also contribute toward understanding the linkage between regulation of accounting for special purposes and general-purpose financial. reporting.

Enzymatic cyclization of a potent Bowman-Birk protease inhibitor, sunflower trypsin inhibitor-1, and solution structure of an acyclic precursor peptide

The most potent known naturally occurring Bowman-Birk inhibitor, sunflower trypsin inhibitor-1 (SFTI-1), is a bicyclic 14-amino acid peptide from sunflower seeds comprising one disulfide bond and a cyclic backbone. At present, little is known about the cyclization mechanism of SFTI-1. We show here that an acyclic permutant of SFTI-1 open at its scissile bond, SFTI-1[ 6,5], also functions as an inhibitor of trypsin and that it can be enzymatically backbone-cyclized by incubation with bovine beta-trypsin. The resulting ratio of cyclic SFTI-1 to SFTI1[6,5] is similar to9:1 regardless of whether trypsin is incubated with SFTI-1[ 6,5] or SFTI-1. Enzymatic resynthesis of the scissile bond to form cyclic SFTI-1 is a novel mechanism of cyclization of SFTI-1[ 6,5]. Such a reaction could potentially occur on a trypsin affinity column as used in the original isolation procedure of SFTI-1. We therefore extracted SFTI-1 from sunflower seeds without a trypsin purification step and confirmed that the backbone of SFTI-1 is indeed naturally cyclic. Structural studies on SFTI-1[ 6,5] revealed high heterogeneity, and multiple species of SFTI-1[ 6,5] were identified. The main species closely resembles the structure of cyclic SFTI-1 with the broken binding loop able to rotate between a cis/trans geometry of the I7-P8 bond with the cis conformer being similar to the canonical binding loop conformation. The non-reactive loop adopts a beta-hairpin structure as in cyclic wild-type SFTI-1. Another species exhibits an isoaspartate residue at position 14 and provides implications for possible in vivo cyclization mechanisms.

The value of dividend imputation tax credits in Australia

A dividend imputation tax system provides shareholders with a credit (for corporate tax paid) that can be used to offset personal tax on dividend income. This paper shows how to infer the value of imputation tax credits from the prices of derivative securities that are unique to Australian retail markets. We also test whether a tax law amendment that was designed to prevent the trading of imputation credits affected their economic value. Before the amendment, tax credits were worth up to 50% of face value in large, high-yielding companies, but Subsequently it is difficult to detect any value at all. (C) 2003 Elsevier B.V. All rights reserved.

Using the tax system to collect fines

In this article we consider the possibility that fines could be collected through the tax and social welfare systems in the same way as higher education contributions and child support payments are currently administered. We argue that the existing system of fine collection and enforcement leads to high default rates and reduces the usefulness of fines as a sanction. We consider a range of models for the implementation of an income-related fine collection system, and discuss their possible implications for issues including judicial independence, the time taken to repay fines and aggregate fine revenue.

The absolute structural requirement for a proline in the P3 '-position of Bowman-Birk protease inhibitors is surmounted in the minimized SFTI-1 scaffold

SFTI-1 is a small cyclic peptide from sunflower seeds that is one of the most potent trypsin inhibitors of any naturally occurring peptide and is related to the Bowman-Birk family of inhibitors (BBIs). BBIs are involved in the defense mechanisms of plants and also have potential as cancer chemopreventive agents. At only 14 amino acids in size, SFTI-1 is thought to be a highly optimized scaffold of the BBI active site region, and thus it is of interest to examine its important structural and functional features. In this study, a suite of 12 alanine mutants of SFTI-1 has been synthesized, and their structures and activities have been determined. SFTI-1 incorporates a binding loop that is clasped together with a disulfide bond and a secondary peptide loop making up the circular backbone. We show here that the secondary loop stabilizes the binding loop to the consequences of sequence variations. In particular, full-length BBIs have a conserved cis-proline that has been shown previously to be required for well defined structure and potent activity, but we show here that the SFTI-1 scaffold can accommodate mutation of this residue and still have a well defined native-like conformation and nanomolar activity in inhibiting trypsin. Among the Ala mutants, the most significant structural perturbation occurred when Asp(14) was mutated, and it appears that this residue is important in stabilizing the trans peptide bond preceding Pro(13) and is thus a key residue in maintaining the highly constrained structure of SFTI-1. This aspartic acid residue is thought to be involved in the cyclization mechanism associated with excision of SFTI-1 from its 58-amino acid precursor. Overall, this mutational analysis of SFTI-1 clearly defines the optimized nature of the SFTI-1 scaffold and demonstrates the importance of the secondary loop in maintaining the active conformation of the binding loop.

Alternating offer games and private rulings of the Australian Tax Office

The concept of submitting oneself to a voluntary negotiation is by no means new to big business. Formal bargaining has been quite successful over the years in providing the venue for agents to explore a more logical and mathematical approach to bargaining. However in more recent times external influences have been applied to agents who provide better deals for favored executives. This external influence has displayed itself in taxtion negotiations to the extent that tax office agents have been dismissed for irresponsible conduct. We explore this specific type of negotiation using an alternating offer bargaining game to model the particular influences, which create unfair rulings in negotiations. By the constraints of this systematic mathematical approach to negotiation, we will explore the advantages of a more formal game theoretic approach. In this presentation we will also elaborate on finding Nash Equilibrium in alternating offer games.