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.

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 role of self-efficacy in predicting rule-following behaviors in shelters for homeless youth: A test of the theory of planned behavior

Through a prospective study of 70 youths staying at homeless-youth shelters, the authors tested the utility of I. Ajzen's (1991) theory of planned behavior (TPB), by comparing the constructs of self-efficacy with perceived behavioral control (PBC), in predicting people's rule-following behavior during shelter stays. They performed the 1st wave of data collection through a questionnaire assessing the standard TPB components of attitudes, subjective norms, PBC, and behavioral intentions in relation to following the set rules at youth shelters. Further, they distinguished between items assessing PBC (or perceived control) and those reflecting self-efficacy (or perceived difficulty). At the completion of each youth's stay at the shelter, shelter staff rated the rule adherence for that participant. Regression analyses revealed some support for the TPB in that subjective norm was a significant predictor of intentions. However, self-efficacy emerged as the strongest predictor of intentions and was the only significant predictor of rule-following behavior. Thus, the results of the present study indicate the possibility that self-efficacy is integral to predicting rule adherence within this context and reaffirm the importance of incorporating notions of people's perceived ease or difficulty in performing actions in models of attitude-behavior prediction.

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.