Incumbent audit firm-provided tax services and the clients with low financial reporting quality

This study investigates whether incumbent audit firm-provided tax services enhance or impair the likelihood of acknowledging client companies’ low financial reporting quality. In particular, we examine the association between tax-related fees and the likelihood of timely restatements, and internal control weakness disclosures among a sample of US companies that all have misstatements in financial information. The empirical findings indicate that companies paying higher tax-related fees are less likely to disclose SOX 404 internal control weakness disclosures, implying that underlying control problems are unacknowledged when incumbent audit firm provided tax-related fees are higher. However, the findings suggest that just providing both audit and tax-related services does not have an impact on audit quality per se, but rather it is the magnitude of the tax-related fees in particular that counts. We also find some evidence suggesting that companies paying higher tax-related fees have higher likelihood of restatement lags, whereas companies paying smaller tax-related fees to their audit firm restate financial statements in a timelier manner. Overall, the findings suggest that audit scrutiny of client companies with low quality financial reporting is weaker when the magnitude of tax-related fees is higher.

Regulating Concessions of Toll Motorways, An Empirical Study on Fixed vs. Variable Term Contracts

Recent theoretical developments on concession contracts for long term infrastructure projects under uncertain demand show the benefits of allowing for flexible term contracts rather than fixing a rigid term. This study presents a simulation to compare both alternatives by using real data from the oldest Spanish toll motorway. For this purpose, we analyze how well the flexible term would have performed instead of the fixed length actually established. Our results show a huge reduction of the term of concession that would have dramatically decreased the firm’s benefits and the user’s overpayment due to the internalization of an unexpected traffic increase.

Counteracting incentive sensitization in severe alcohol dependence using deep brain stimulation of the nucleus accumbens: clinical and basic science aspects

The ventral striatum / nucleus accumbens has been implicated in the craving for drugs and alcohol which is a major reason for relapse of addicted people. Craving might be induced by drug-related cues. This suggests that disruption of craving-related neural activity in the nucleus accumbens may significantly reduce craving in alcohol-dependent patients. Here we report on preliminary clinical and neurophysiological evidence in three male patients who were treated with high frequency deep brain stimulation of the nucleus accumbens bilaterally. All three had been alcohol dependent for many years, unable to abstain from drinking, and had experienced repeated relapses prior to the stimulation. After the operation, craving was greatly reduced and all three patients were able to abstain from drinking for extended periods of time. Immediately after the operation but prior to connection of the stimulation electrodes to the stimulator, local field potentials were obtained from the externalized cables in two patients while they performed cognitive tasks addressing action monitoring and incentive salience of drug related cues. LFPs in the action monitoring task provided further evidence for a role of the nucleus accumbens in goal-directed behaviors. Importantly, alcohol related cue stimuli in the incentive salience task modulated LFPs even though these cues were presented outside of the attentional focus. This implies that cue-related craving involves the nucleus accumbens and is highly automatic.