Excellence in Management Education. Activity Report 2015/2016. Chair of Business Taxation

Transcription

1 Excellence in Management Education Activity Report 2015/2016

2 Table of Contents Table of Contents 2 Foreword 3 1. Team 4 2. Teaching Bachelor of Science Program Master of Science Program 7 3. Theses BSc Program MSc Program Doctoral Program 8 4. Research Articles in Refereed Journals Working Papers Review and Editorial activities Affiliations and Memberships Paper Presentations awards 5. Services provided to the School WHU Financial Accounting and Tax Center nd Berlin-Vallendar Conference on Tax research Community outreach 15 Page 2

3 Foreword Tax policy has important implications on individual behavior and firm decisions. For example, location decisions of firms, profit shifting of multinationals, capital structure, payout policies, and corporate investments are affected by corporate and individual taxes. Individuals decide on their labor supply, migration, or becoming a business owner. All these decisions are affected by taxes. Taxation is an important aspect when studying economics, finance, and accounting. The aims at deepening the understanding of the effects of taxation. The Chair s research and teaching relates to the three subjects economics, finance, and accounting. First, the Chair s research relates to the economics literature on individual tax evasion and tax avoidance decisions. Second, teaching and research focus on finance topics, for example, the effects of taxes on payout policies and investment policies of firms. Third, the Chair s research focuses on the role of taxes in accounting, in particular, on the effect of accounting norms on tax revenues and the valuation relevance of tax accounting. This report summarizes activities of the Chair of Business Taxation during the academic year 2015/2016. Vallendar, September 2016 Prof. Dr. Martin Jacob 3

4 1. Team Professor Dr. Martin Jacob Chairholder Tel Hanna Op den Camp Personal Assistant Tel Professor Martin Jacob is Professor of Business Taxation at WHU Otto Beisheim School of Management. He received his diploma degree in business administration and his doctoral degree from the University of Tübingen, Germany. His extensive international experience stems from working with the Expert Group of Public Economics of the Swedish Ministry of Finance and from research visits at the Booth School of Business, University of Chicago, the University of North Carolina at Chapel Hill, or the Uppsala Center for Fiscal Studies. Hanna Op den Camp joined the chair in March 2015 as a Personal Assistant. After her Bachelor Studies in Communication Sciences at the University of Perugia/Italy and her Master Studies in Political Communication at Heinrich-Heine- Universität Düsseldorf, she gained experiences in various working stations in Germany and abroad. She has been working in the PR & Marketing Departments of non-profit foundations as well as in the private sector. Professor Jacob has numerous publications in the field of business taxation. Professor Jacob worked as a consultant for the Expert Group of Public Economics of the Swedish Ministry of Finance. He is the co-author of two policy reports for the Swedish government that are widely cited in media, political debates, and standard setting processes. He has further published in a number of leading international journals including the Journal of Financial Economics, the Journal of Accounting Research, the Journal of Financial and Quantitative Analysis, and the Journal of Public Economics. He further serves as a guest editor for a special issue on tax research of the European Accounting Review and is Associate Editor of the European Accounting Review and Accounting & Business Research since

5 Inga Bethmann Research Assistant Tel Antonio de Vito Research Assistant Tel Inga Bethmann joined the chair in February 2014 as a research assistant. Her research interests include empirical tax research. She received her Bachelor of Science at the University of Hamburg and her Master of Science at the University of Mannheim. She studied at the Temple University in Philadelphia as an exchange student for one year. She worked as a student assistant at the Chair of Auditing at the University of Hamburg and at the Department of Corporate Taxation and Public Finance at the Center for European Economic Research (ZEW) in Mannheim. Inga Bethmann did an internship with e.g. PricewaterhouseCoopers in the Tax-Financial Services Department (Hamburg) and at the German Desk (New York), and with KPMG in the Tax- M&A Department (Frankfurt). Antonio De Vito joined the chair in November 2013 as a research assistant. His research interests include corporate tax avoidance and international taxation. He received his B.S. in Business Administration and Law (cum laude) at University of Salento in Italy and his MSc in Business Administration and Law at Bocconi University in Italy. In Spring 2016 he spent a semester at Kenan-Flagler Business School, University of North Carolina, Chapel Hill (USA), as a visiting scholar. In the academic year he was awarded the ISU Scholarship by Bocconi University. Antonio worked as a junior auditor at Deloitte & Touche in Milan. 5

6 2. Teaching Academic Program The academic program Business Taxation aims at providing knowledge on how taxes affect business decisions. In collaboration with external lecturers, the chair offers lectures in undergraduate, graduate, and postexperience programs. In the BSc program, the chair offers one lecture on the principles of business taxation. This course is taught in German and focuses on German tax law. Further, the module Business Taxation combines a lecture on the effects of corporate and individual taxation on business decisions with a case study course. In the MSc, the chair offers the lecture International Tax Strategy which covers the taxation of globally active companies from a multinational perspective. Principles of Tax Law Spring Term 2016, 2 SWS The aim of the lecture Principles of Tax Law is to give an introduction to German tax law. The course, for example, deals with the personal income tax, the local business tax, and issues of corporate taxation. The lecture focuses on tax law details of Germany and is held in German. After successfully participating in the lecture Principles of Tax Law, participants understand the basic concepts of taxation and are able to apply the concepts to practical problems. The lecture Principles of Tax Law is the basis for other tax courses on the effects of taxation on business decisions. 2.1 Bachelor of Science Program Business Taxation Fall Term 2015/Spring Term 2016, 2 SWS The aim of the module Business Taxation is to give an introduction to the topic of taxation of corporations, shareholders, and businesses and to deepen the understanding of how taxes affect business decisions. The course, for example, deals with the tax influence on investment decisions, financing decisions, the choice of organizational form, and mergers and acquisitions. The lecture focuses on concepts that can be applied to different tax systems around the world. To deepen the understanding of these concepts, the second part of the module is based on case studies. After successfully participating in the module Business Taxation, participants understand the role of taxes in key business decisions and are able to apply the concepts to practical problems. 6

7 2.2 Master of Science Program International Tax Strategy Fall Term 2015, 2,5 SWS The goal of the module International Tax Strategy is to deepen the understanding of the influence of taxation on multinational companies. The course focuses on taxation of globally active companies from a multinational perspective. It is not necessary to have detailed knowledge of German or any other national tax law. It is the goal of the course to teach critical concepts of international taxation from a global perspective, which are relevant for decision making in multinational companies. The course covers, for example, the treatment of foreign profits, tax treatment of branches and subsidiaries, cross-border financing of companies, anti-avoidance rules, and transfer pricing. The second major focus of the course relates to the economic consequences of international tax rules and how companies react to tax incentive, for example, through international tax planning. 7

8 3. Theses 3.1 BSc Program Matthias Maier Control of Intangibles in Light of OECD s BEPS Report (Cooperation with Henkel) Lukas Mommertz Why Did Tax Avoidance Increase? The Role of Tax Risk and Aggressive Tax Planning Nicolas Preiß The OECD/G20 Base Erosion and Profit Shifting Project: Implementation and Expected Efficiency to Counteract Tax Avoidance Bruno Veltri The Effect of Corporate Taxes on Wages and Employment A Case Study of the German Local Business Tax System 3.2 MSc Program Maximilian Jensen Tax Incentives and R&D Investments -Which effect do R&D tax incentives have on private as well as public sector R&D expenditure? Markus Kuehn Firm Tax Uncertainty, Cash Holdings and Investments Timm Niethammer The Impact of Thin Capitalization Rules on Capital Structure, Profitability and Investments: Evidence from Italy Arne Sell Withholding Taxes and International Portfolio Investments Co-Supervision Daniel Luca Assmann Operational Value Creation in Private Equity - Engaging for Operational Excellence Kevin Marchel Why invest in Private Equity? - An Empirical Comparison of Private Equity Returns to Levered Stock Market Returns Dania D. Veen Key Drivers of Private Equity Performance: Analysis of German Leveraged Buyouts 3.3 Doctoral Program Supervision Inga Bethmann Working Title: Taxes and Investments The dissertation focuses on investment effects of corporate taxes. The first part of the thesis examines to what extent the tax loss treatment influences a firm s investment behavior. In a sample of European private firms, this study finds that a less restrictive allocation of tax refunds to loss firms arising from loss carrybacks vis-à-vis carryforwards increases loss firms investment. A third of the tax refund from loss carryback is invested. The other two-thirds are set aside as cash or returned to shareholders. It also finds a delayed exit of loss firms with low productivity indicating that a less restrictive allocation of tax benefits to loss firms increases misallocation risk. While loss firms generate higher output under carryback regimes, the output gains from their investment are substantially smaller than for profitable firms. Taken together, these results suggest that a less asymmetric treatment of tax losses relative to profits increases investment and output at the cost of distorting the competitive selection of firms. The second part of the dissertation studies tax elasticities of capital using variation in local business tax rates in Germany. As opposed to most prior studies, this setting allows to compute cleaner estimates of the size of the impact. Moreover, it provides estimates to what extent there is heterogeneity in tax elasticities across firms, depending e.g. on their ownership structure or financial situation. These findings help to explain the wide range of estimates for tax rate or user cost elasticities of capital that can be found in the literature (see e.g., Dwenger 2014). Moreover, this study helps to understand why firms adjust their capital (changes in the scale of a firm s operations or relocation of investments) and which firms are most affected by a change in tax policy. 8

9 Antonio de Vito Working Title: Essays on corporate tax avoidance This project reassesses the role of taxation in multinationals profit shifting. Using a European sample of multinationals and their subsidiaries, we exploit multiple tax rate reforms in a difference-in-differences setting to examine when and why tax rate changes affect profit shifting. Our results suggest that lowering the statutory corporate tax rate in the country of the parent company incentivizes subsidiaries to shift back profits to the parent country. A one standard deviation decrease in the change in the tax difference (2.7 percentage points) reduces profits by 7% in the host country. This effect is stronger when the change in the tax difference is large enough to reverse the sign of the tax rate difference. Furthermore, profit shifting responses to tax reforms in the parent country are muted by economic growth in the host country of the subsidiary but are strengthened by strong institutions in the host country. Co-Supervision Lennart Ulrich Working Title: Solving the puzzle of anti-takeover laws It is the goal of this dissertation to analyze the effects of anti-takeover laws on firm value. The economic magnitude as well as the direction of the effect is still unclear: On the one hand, firms protected from takeovers could avoid myopic decisions and exert higher bargaining power in case of a takeover. On the other hand, managers could become entrenched, since the disciplining effect of the market for corporate control is mitigated. Using the announcement of an antitakeover law in the UK as a quasi-exogenous experiment provides a unique opportunity to address shortcomings of other studies and to resolve their puzzling results. Moreover, I am the first to present post financial crisis evidence on the firm value effects of anti-takeover laws. Due to the conversion of the takeover framework in the US to the one in the UK, my research project offers huge policy implications. 9

10 4. Research 4.1 Articles in Refereed Journals Martin Jacob, forthcoming, Tax Regimes and Capital Gains Realizations, European Accounting Review Laura Dobbins and Martin Jacob, forthcoming, Do Corporate Tax Cuts Increase Investments?, Accounting and Business Research Annette Alstadsæter, Martin Jacob and Roni Michaely, forthcoming, Do Dividend Taxes Affect Corporate Investment?, Journal of Public Economics Annette Alstadsæter and Martin Jacob, forthcoming, Dividend Taxes and Income Shifting, Scandinavian Journal of Economics Kay Blaufus, Matthias Braune and Jochen Hundsdoerfer and Martin Jacob, Does Legality Matter? The Case of Tax Avoidance and Evasion, Journal of Economic Behavior & Organization, 2016, 127, Working Papers Annette Alstadsæter, Martin Jacob, Wojciech Kopczuk and Kjetil Telle, 2015, Accounting for Business Income in Measuring Top Income Shares: Integrated Accrual Approach Using Individual and Firm Data from Norway Kathleen Andries, Martin Jacob and John Gallemore, 2015, The Effect of Corporate Taxation on Bank Transparency: Evidence from Loan Loss Provisions Inga Bethmann, Martin Jacob and Maximilian A. Müller, 2015, Asymmetric Treatment of Tax Losses and Corporate Investment Martin Jacob, Kelly Wentland and Scott Wentland, 2015, Real Effects of Tax Uncertainty: Evidence from Firm Capital Investments Martin Jacob, Roni Michaely and Maximilian A. Müller, 2016, Consumption Taxes and Corporate Investment Martin Jacob, Sofia Johan, Denis Schweizer and Feng Zhan, Corporate Finance and Governance Implications from the Removal of Government Support Programs, Journal of Banking and Finance, 2016, 63, Martin Jacob, Cross-Base Tax Elasticity of Capital Gains, Applied Economics, 2016, 28,

11 4.3 Review and Editorial Activities Associate Editor: European Accounting Review Accounting and Business Research Editorial Board: Business Research Reviewer for Journals: The Accounting Review American Economic Journal: Economic Policy Applied Financial Economics Die Betriebswirtschaft (DBW) FinanzArchiv / Public Finance Analysis Fiscal Studies International Tax and Public Finance Journal of Accounting Research Journal of Economic Psychology Journal of Public Economics National Tax Journal Schmalenbach Business Review (sbr) Zeitschrift für betriebswirtschaftliche Forschung (zfbf) Journal of Finance Journal of Financial and Quantitative Analysis Reviewer for Conferences: Society for Financial Studies Cavalcade VHB Jahrestagung American Accounting Association Annual Meeting European Accounting Association Annual Meeting 4.4 Affiliations and Memberships American Accounting Association (AAA) American Economic Association (AEA) American Finance Association (AFA) European Accounting Association (EAA), Standing Scientific Committee Member European Economic Association (EEA) European Finance Association (EFA) International Institute of Public Finance (IIPF) Uppsala Center for Fiscal Studies (UCFS) Verein für Socialpolitik (VfS) 4.5 Paper Presentations October 2015: 2nd Ma Tax Conference, Mannheim October 2015: Ludwig-Maximilians Universität, München. November 2015: Wirtschaftsuniversität Wien, Vienna; November 2015: European School of Management and Technology, Berlin. December 2015: Tilburg University, Tilburg; December 2015: ESADE Business School, Barcelona. January 2016: American Economic Association Annual Meeting, San Francisco. June 2016: NHH Bergen July 2016: IDC Summer Finance Conference 4.6 Awards May 2016: VHB Best Paper Award 11

12 5. Services provided to the School Group Speaker Finance and Accounting Group Presentation Bachelor Information Day Presentation Master Information Day Organization of the Financial Accounting and Tax Center Research Seminar Member of WHU Senate Member of the Doctoral Commitee Several seminars for WHU Doctoral Students Scientific Advisory Board MaTax MannheimTaxation Science Campus Nachwuchsbeauftragter der Kommission Steuerlehre des VHB (since July 2015) Organization of the 2nd Berlin-Vallendar Conference on Tax Research in Berlin on July 21 and 22, WHU Financial Accounting & Tax Center The WHU FAccT Center conducts research on the economic consequences of financial reporting and business taxation with a focus on practice-relevant questions (relevance) based on high standard scientific methodology (rigor). Results are published in well-known German and International academic journals (e.g. Journal of Public Economics, Journal of Accounting Research, Journal of Financial Economics). Discussion in practice is encouraged by articles in professional and popular media. WHU Research Seminar In the FAccT Center Research Seminar Series invited speakers present and discuss their current work. Speakers receive written feedback on their projects and take advantage of the opportunity to network and discuss with the FAccT Center faculty members and PhD students. 12

13 Research seminar guests Fall Term 2015: Research seminar guests Spring Term 2016: Bjorn Jorgensen, London School of Economics: Domestic and Transnational Effects of Tightening Disclosure Rules: Lessons from the Oil & Gas Industry Florin Vasvari, London Business School: Political Lending John Gallemore, Chicago Booth School of Business: Banks as Tax Planning Intermediaries Annita Florou, King s College London: Are International Accounting Standards more Credit Relevant than Domestic Standards? Michelle Hanlon, MIT: Changes in Corporate Effective Tax Rates Over the Past Twenty-Five years Daniel Saavedra, University of California: Tax Refund Firms Gilad Livne, University of Exeter: Does Street Earnings Matter More than GAAP Earnings for CEO Turnovers? Kay Blaufus, Leibnitz University of Hannover: Mental Accounting and the Timing of Taxation Jennifer Blouin, The Wharton School: Understanding the Information of Book-Tax Differences Juan-Pedro Gomez, IE Business School: Tax Enforcement and Income Diversion: Evidence after Putin s Election in 2000 Ivo Welch, UCLA Anderson School of Management: Levered Returns 13

14 5.2 2nd Berlin-Vallendar Conference on Tax research On July 21 and 22, 2016, the 2nd Berlin- Vallendar Conference on Tax Research took place at Freie Universität Berlin. Already for the second year, the organizers at WHU Otto Beisheim School of Management and at Freie Universität Berlin were able to welcome a selected scientific audience. A total of eight researchers had the chance to present their current projects in the field of tax research. A selected group of international researchers, among others a representative of the European Commission, discussed their work. To name a few examples of presented papers, John Gallemore (University of Chicago) presented his paper Banks as Tax Planning Intermediaries, a joint work with Brandon Gipper (University of Chicago) and Edward Maydew from the University of North Carolina at Chapel Hill. Technology Sydney presented his paper Dividend Imputation and Optimal Tax Rates, a joint work with Roman Lanis, Peter Wells and Brett Govendir (all from the University of Technology Sydney). Sebastian Eichfelder from the University of Magdeburg discussed their work. Johannes Voget from the University of Mannheim presented his paper Corporate Taxation and Location of Intangible Assets: Patents vs. Trademarks, co-authored with Olena Dudar (ZEW Mannheim). Diego d Andria from the European Commission discussed their work. Ross McClure from the University of We are very happy that we again successfully welcomed such an excellent group of national and international researchers at the 2nd Berlin- Vallendar Conference on Tax Research. The presented papers and the following discussions about the role of taxation for business decisions provided us with highly relevant research insights, stated co-organizer Martin Jacob from WHU Otto Beisheim School of Management. The 2nd Berlin-Vallendar Conference on Tax Research was jointly organized by Frank Hechtner, Freie Universität Berlin, and Martin Jacob, WHU Otto Beisheim School of Management, Vallendar. The conference was partly sponsored by PriceWaterhouse Coopers. The next conference is scheduled for summer

15 6. Community outreach The sustainability of a tax system is one of the key issues of policy makers as not only shortterm consequences but also long-term effects are relevant for the evaluation of tax reforms. Sustainability in taxation is discussed in all lectures of the chair of Business Taxation. Over the past years, a research project had direct policy influence on Swedish tax law and the outcome of a research project is widely cited in the Norwe-gian tax policy debate. Integrated Accrual Approach Using Individual and Firm Data from Norway, 2015, (with Annette Alstadsæter, Wojciech Kopczuk and Kjetil Telle) received great attention in the Norwegian press. The results of the project delivered important insights for the debate on income inequality. The joint project Income Shifting in Sweden with Annette Alstadsæter, University of Oslo, on income shifting and tax avoidance of closely held corporations has received great attention by the Swedish press and, ultimately, the Swedish parliament. In addition, one of the papers from this project ( Do Dividend Taxes Affect Corporate Investment? ) is widely cited in the Norwegian policy debate on future tax reform proposals. In addition the study Accounting for Business Income in Measuring Top Income Shares: 15

16 WHU - Otto Beisheim School of Management Burgplatz Vallendar Germany Fon hanna.opdencamp@whu.edu 09/2016