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How does depreciations management affect subsequent fiscal performance? The case of the Swiss cantons

Maxime Clémenceau () and Nils Soguel ()
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Maxime Clémenceau: Economic Advisory, EY

Swiss Journal of Economics and Statistics, 2018, vol. 154, issue 1, 1-15

Abstract: Abstract Creative accounting allows governments and, more particularly, finance ministers to somehow manage financial reports to achieve specific and possibly self-interested goals. It is usually used to hide deficits. It sometimes also helps to present financial performance as being more worrisome than it actually is. In that case, ministers press more than needed for lower expenses and a higher tax burden. This pressure is expected to tame deficits or increase surpluses over time. Using panel data relative to the 26 Swiss cantons over the period 1980–2013, we estimate econometrically how a political finessing technique like ‘depreciations management’ affects subsequent government expenses and revenues and thus subsequent financial performance.

Keywords: Creative accounting; Depreciations management; Government deficits; Swiss cantons; Simultaneous equation model (search for similar items in EconPapers)
JEL-codes: C23 D73 H62 H72 H83 (search for similar items in EconPapers)
Date: 2018
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DOI: 10.1186/s41937-017-0017-4

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