Profit Incentives Research Articles

Tax Minimization sebagai Pemoderasi Determinan Praktik Transfer Pricing

Objectives: Testing tax minimization as a moderator of the impact of tax burden, profitability and tunneling incentives in influencing transfer pricing practices.Design/method/approach: Associative quantitative approach. Population of coal subsector industrial companies registered on the IDX for the 2017-2021 period. From the Purposive Sampling technique of 11 companies over five years, a total of 55 data were observed. Moderated regression analysis with panel data and analysis tools, namely E-views software.Results/findings: Tax minimization as a potential moderating variable is able to moderate the tax burden on transfer pricing practices insignificantly. Profitability and Tunneling Incentives have a significant positive influence on transfer pricing practices. Meanwhile, tax burden and tax minimization have no influence on transfer pricing practices.Theoretical contribution: These findings are able to prove that transfer pricing practices can be influenced by internal and external factors of the Company and support agency theory regarding conflicts of interest between the Company, shareholders and the government regarding aspects of taxation and transfer pricing and become a reference for further research.Practical contribution: Become a reference for the tax authorities or DJP in formulating policies regarding tax regulations related to transfer pricing by providing strict and more detailed supervision for companies that carry out transfer pricing.Limitations: Moderating variables are not used to moderate all independent variables in influencing the dependent variable.

Sources of funding and performance of microfinance institutions over the life cycle

Microfinance institutions (MFIs) typically rely on both commercial sources of funding like equity, debt, and deposits, and non-commercial sources, such as donations and grants. Profit incentive theory predicts that commercial sources of funding positively impact performance regardless of the life-cycle stage of an MFI. Life cycle theory proposes that the sources of funding and the performance outcomes associated with those sources vary by life cycle stage. We test both of these theories using an 18-year global MFI data set. We find evidence of an interplay between profit incentive and life cycle theories as equity funding is positively associated with financial and social performance metrics, but only in mature MFIs. Grant funding is negatively associated with financial performance and positively associated with operating expenses over the entire MFI life cycle. The findings suggest that analyses of funding should consider the lifecycle and that policymakers should expect variation in MFI performance across both the lifecycle and by funding source.

CheckOut: User-Controlled Anonymization for Customer Loyalty Programs

To resist the regimes of ubiquitous surveillance imposed upon us in every facet of modern life, we need technological tools that subvert surveillance systems. Unfortunately, while cryptographic tools frequently demonstrate how we can construct systems that safeguard user privacy, there is limited motivation for corporate entities engaged in surveillance to adopt these tools, as they often clash with profit incentives. This paper demonstrates how, in one particular aspect of everyday life -- customer loyalty programs -- users can subvert surveillance and attain anonymity, without necessitating any cooperation or modification in the behavior of their surveillors. We present the CheckOut system, which allows users to coordinate large anonymity sets of shoppers to hide the identity and purchasing habits of each particular user in the crowd. CheckOut scales up and systematizes past efforts to subvert loyalty surveillance, which have been primarily ad-hoc and manual affairs where customers physically swap loyalty cards to mask their real identities. CheckOut allows increased scale while ensuring that the necessary computing infrastructure does not itself become a new centralized point of privacy failure. Of particular importance to our scheme is a protocol for loyalty programs that offer reward points, where we demonstrate how CheckOut can assist users in paying each other back for loyalty points accrued while using each others' loyalty accounts. We present two different mechanisms to facilitate redistributing rewards points, offering trade-offs in functionality, performance, and security.

Medicare Advantage Under Fire: Public Criticism and Implications.

Congressional hearings and public reports have drawn attention to problems afflicting Medicare Advantage (MA), the privatized version of Medicare. Private plans became a staple of Medicare through the passage of the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA). Congress passed this law during a furor of privatization, when think tanks and powerful financial interests emphasized the power of corporations' profit incentive to improve the efficiency and quality of social enterprise. Yet the surging criticism of MA suggests a misalignment between the financial interest of some MA plans and the well-being of their patient populations. The criticisms range from deceptive marketing, ghost networks, and patient cherry-picking to unethical prior authorization denials and defrauding the government. In total, MA plans cost the federal government 22% more per patient than if these patients in question were enrolled in traditional Medicare. Moreover, it is not clear that this additional funding is producing proportional benefits. These developments raise questions about the presence of a profit incentive in Medicare, and perhaps health care more broadly.

Nexus between good governance and financial sustainability: evidence from microfinance sector of India

PurposeMicrofinance emerged as an essential catalyst for socio-economic development and financial inclusion to reduce poverty. Microfinance institutions cannot meet their primary objective of poverty reduction if they are not sustainable financially. With the theoretical support of profit incentive theory, this paper aims to investigate the impact of organizational structure (OS), growth outreach (average loan per borrower [ALPB] and number of active borrowers), women empowerment (percentage of women borrowers [PWB]), liquidity, leverage and cost efficiency (cost per borrower) on the financial sustainability of microfinance providers (MFPs) in India and explore the possible moderating effect of the national governance indicators (NGIs).Design/methodology/approachA financial sustainability index has been developed by using principal components analysis, including both conventional measures (return of assets and return on equity) and efficiency measures (operational self-sufficiency and financial self-sufficiency). Due to the existence of endogeneity and heteroskedasticity, this study uses two-step system generalized method of moments estimates to examine the relationships for a period of 2006 to 2018.FindingsThe finding reveals that there is a strong significant relationship between financial sustainability and its influential factors. Organizatioanl Structure, loan size, women borrowers, Gross Domestic Products and inflation enhance the financial sustainability of India’s microfinance sector. However, a number of borrowers, liquidity, leverage and operating costs negatively affect the financial sustainability of MFPs of India. The estimates demonstrate that NGIs significantly moderate the association between financial sustainability and its influential factors. The NGIs negatively affect the positive impact of Organizatioanl Structure on financial sustainability. National governance increases the positive effect of loan size (ALPB) and reduces the negative effect of a number of borrowers and leverage on the financial sustainability of MFPs of India. However, NGIs negatively affect the positive relationship between Percentage of Women Borrowers and Financial sustainability of Microfinance Providers of India.Originality/valueTo the best of the authors’ knowledge, this study is the first of its kind that incorporates all of the six dimensions of the National Governance Indicators (NGIs) and uses as a moderator. Secondly, a financial sustainability index has been developed for measuring the financial sustainability of Microfinance Providers (MFPs).

Platform business models and strategic price interaction

Business platforms delivering Mobility-as-a-Service (MaaS), alongside providing additional user services, have been shown to bring important price strategic interaction impacts which can be welfare improving. We show that the Integrator platform, whose structure alleviates harmful price externalities with two operators, such that it everywhere welfare dominates the Free-Market, can also limit beneficial competitive forces with more operators, reversing this welfare ordering. This is important since MaaS envisages platforms bringing together multiple operators and services in practice. However, calibrations show that where the Integrator platform fails to outperform the Free-Market (with higher operator numbers and lower substitutability), a new platform-based model that we introduce, is optimal. Furthermore, the Integrator is promoted in welfare terms in the presence of non-trivial marginal costs and mid- to high-end market demand elasticities, conditions both consistent with the inclusion in the MaaS journey mix of taxi cabs and other on-demand services which are common-place in MaaS offerings. We also introduce a number of extensions to the modelling framework incorporating additional real network characteristics. Though this can result in the welfare supremacy of the Integrator relative to the Free-Market being undermined, it again tends to be restored under mid- to high-range market elasticity calibrations. Finally, profit incentives tend to neither align across platform providers and operators, nor promote the welfare-best regime, indicating potential for regulatory oversight.

How Profitability, Leverage, Financial Distress, Institutional Ownership, and Capital Intensity affect Accounting Conservatism

This research seeks to ascertain how accounting conservatism is impacted by institutional ownership, profitability, leverage, financial hardship, and capital incentives. The study employs secondary data, specifically manufacturing companies listed on the Indonesia Stock Exchange (BEI) for the 2016–2020 timeframe, using a quantitative correlation research approach. Twenty-six companies made up the research sample. Purposive sampling was the method of sampling that was applied. Analysis using multiple linear regression is the analytical technique employed. The study's findings indicate that while financial distress and capital intensity are related to accounting conservatism, profitability, leverage, and institutional ownership do not. Management implications for accounting conservatism in relation to profitability, leverage, financial distress, institutional ownership, and capital are financial strategies. Implications related to capital intensity can influence the company's financial strategy; if capital intensity is related to the level of accounting conservatism, managers can consider a capital structure that is in accordance with conservative goals

Incentive mechanism for sharing and using EHR in medical consortiums based on performance evaluation.

The construction of medical consortiums not only promotes active cooperation among hospitals, but also further intensifies active competition among them. The shared use of electronic health records (EHR) breaks the original pattern of benefit distribution among hospitals. The purpose of this paper is to establish an incentive mechanism for the shared use EHR, and to reveal the incentive effect and mechanism of key factors, and to put forward management suggestions for solving the real conflicts. We constructed a basic incentive model and an incentive model that introduces performance evaluation as a supervisory signal, based on analyzing the hospital cost function, the hospital benefit function, and the incentive contract function. Finally, the incentive effects of key factors before and after the introduction of performance evaluation were verified and compared using MATLAB simulation method. The profit level and incentive coefficient of hospitals sharing EHR are independent of the amount of one-time government subsidies. Regardless of whether a performance evaluation supervisory signal is introduced or not, the incentive coefficients are increasing functions with respect to ρ, τ, but decreasing functions with respect to β, δ, γ. After the inclusion of supervisory signal of performance evaluation in the model, the ability of hospitals to use EHR has a higher impact effectiveness on improving both incentive effects and benefit levels. The impact of the value-added coefficient on the level of earnings is consistently greater than it would have been without the inclusion of the performance evaluation supervisory signal. Enhancing the capacity of hospitals to use EHR and tapping and expanding the value-added space of EHR are 2 key paths to promote sustainable shared use of EHR. Substantive performance evaluation plays an important role in stabilizing incentive effects.

Optimal collective reputation

ABSTRACT Collective reputation, such as watches “made in Switzerland”, affects the whole industry all over the world. This article highlights the relationship between competition and collective reputation. First, collective quality level depends on firms objectives. Second, the collectively determined quality of profit incentive firms reaches social optimal level. Finally, quality restriction is more efficient than subsidies to promote collective quality. The policy implication is that antitrust policy should not care about jointly determined quality for profit incentive firms. Further, cooperative innovation is encouraged to promote the collective reputation or cooperative innovation promotes the values of patents by collective reputation.

Breaking the Bank: Effects of Domestic Conflict on the Banking Sector in Turkey

ABSTRACT Although banks occupy a central role in most (post-)conflict situations, there is a perplexing lack of attention to them in studies of political violence. As a case experiencing domestic conflict with varying degrees in the last decades, Turkey offers opportunities to understand how the banking sector, including state deposit banks, responds to such political violence. We focus on the short-term impact of political violence and address the following questions: Do all actors in the sector respond in similar ways to security threats? Is there variation according to conflict intensity? We shed light on these puzzles with an analysis of original data on bank ownership, bank branches, bank deposit amounts, and bank credits. We show that banks with profit incentives respond to conflict by lowering their presence in provinces hit by these attacks. In comparison, our finding that deposits in high conflict intensity areas are not affected suggests that it is indeed economic actors outside high intensity regions that are more sensitive to short-time changes in security compared to local ones. Overall, the results demonstrate that political violence hurts banks’ presence in conflict locations and their presence matters through credit provision to these areas.

Knowledge work compulsion: The neoliberal mediation of working existence in the network society

This contribution seeks to understand the pervasive phenomenon of work compulsion among knowledge workers in our present network society. Knowledge workers not only have to work all the time from anywhere, but they also appear to want to. This study argues that this curious phenomenon may be attributed to the thumotic satisfaction that knowledge work generates. What is more, the neoliberal theory of human capital has found a way to harness thumotic satisfaction to the profit incentive, and has created arguably the most productive working subject to date. The argument is divided into four parts: First, the paper analyses the government(- ality) of control operative in the network society by defining “neoliberalism”. It then focuses on Foucault’s examinations of German and American neoliberalism in the 20th century, treating them as instances of governmentality. The aim is to assess whether employing a governmentality lens is a valid approach for critically analysing present-day neoliberalism. If it proves justifiable, which I argue it does, the study explores the potential valuable insights gained from examining contemporary neoliberalism through this particular analytical framework. Second, the study turns to the “spiritedness” of knowledge workers under the conditions of stealth control that typify the neoliberal network society. Curiously, these highly engaged workers have reportedly experienced increased overall well-being. However, their overinvestment in work appears to be disproportionate to absolute necessity, increased earnings or improved overall quality of life. This paper contends that work compulsion generates and is in turn fuelled by thumotic satisfaction. Third, the study tries to ascertain the connection between neoliberal governmentality and thumos. Neoliberal governmentality appears to have found a way to appropriate thumotic satisfaction to produce and sustain the competitive entrepreneurial spirit. The fourth part of the study considers how the knowledge worker might resist the compulsion to work incessantly.

(Why) Do Central Banks Care about Their Profits?

ABSTRACTWe document that central banks are discontinuously more likely to report slightly positive profits than slightly negative profits, especially when political pressure is greater, the public is more receptive to extreme political views, and central bank governors are eligible for reappointment. The propensity to report small profits over small losses is correlated with higher inflation and lower interest rates. We conclude that there are agency problems at central banks, which give rise to discontinuous profit incentives that correlate with central banks’ policy choices and outcomes. These findings inform the debate about the political economy of central banking and central bank design.

The group decision-making evolution of green consumption behavior under overreaction: Based on multi-agent simulation analysis

Promoting green consumption behavior is an effective means to promote sustainable development. Previous studies have not considered the irrational decisions of residents under the influence of complex internal and external information, so this study introduces overreaction theory into a multi-agent simulation model. The results show that (1) Greater economic profit and government incentive can encourage green consumption behavior decision and are conducive to the stability of group decision state. (2) When the difference between the consumption cost of green and general consumption is too large, the group with low initial adoption rate will evolve to another decision state. And environmental loss has little effect on green consumption behavior. (3) The stronger the overreaction of consumers to green consumption, the greater the volatility of group decision-making, but also the greater the probability choosing green consumption behavior. These findings provide a theoretical reference for the formulation of related policies.

Organizational constraints and outsourcing under demand uncertainty: Evidence from the Brazilian electricity distribution industry

This paper examines how public firms’ organizational constraints affect the sensitivity of labor outsourcing to demand uncertainty. We focus on a single industry in which state-owned firms are subject to additional organizational constraints that private firms are not. We mitigate omitted variable bias by considering the endogenous trade-off between insourcing and outsourcing by measuring average labor prices for each firm. We find that, on average, private firms with strong incentives for profit and flexibility rely more on outsourcing; moreover, their outsourcing is more sensitive to relative prices of insourced and outsourced labor. However, when demand uncertainty arises, state-owned firms increase outsourcing more, making their outsourcing less sensitive to input prices. The results suggest the organizational constraints of state-owned firms, such as multiple objectives other than profit maximization and strong labor protection of insourced labor, exacerbate the downside risk of hiring insourced labor under fluctuating demand, leading state-owned firms to rely more on outsourcing.

Trust and attitudes toward income inequality: Does individualism matter?

In the last decade authors have increasingly examined the role of two cultural traits – trust and individualism – on a variety of economic outcomes ranging from gendered attitudes to entrepreneurship, human capital accumulation, and economic development. While both have positive effects, recent literature suggests that the effects of trust are often conditional on other variables, and this aspect has been neglected in the literature. Indeed, a recent paper found that with respect to gendered attitudes, there are important interactions between the traits of trust and individualism. Building on this foundation we explore how views of trust and individualism interact to affect attitudes about income inequality. Our results show that while views regarding social trust generally positively affect the desire for income equality, this effect is strengthened in the presence of high individualism. Alternatively stated, distrust in highly individualistic environments leads to a greater desire for income differences (inequality). Our result highlights the important role played by market-based price and profit incentives in fostering economic activity and exchange in larger, impersonal extended orders where interpersonal trust and reputational effects are generally absent (in contrast to personal, small group exchange). Our results are robust to a variety of techniques to establish identification and account for sample selection and omitted variable bias.

Profit Sharing and Incentives

We model a firm as a team production process subject to moral hazard and derive the optimal profit sharing scheme between productive workers and outside investors together with incentive contracts based on noisy performance signals. More productive agents with noisier performance signals are more likely to receive shares which can explain why managers are motivated by shares, and law or consulting firms form partnerships. A firm that grows by opening branches is held almost entirely by outside investors when its output noise grows faster than the number of branches. Otherwise, insiders hold substantial amount of a large firm’s shares.

The Analysis of Political Connections Impact, Profitability, Firm Size, Leverage and Tax Incentives on Tax Aggressiveness Before and After Tax Amnesty Policy in Indonesia (Study on Real Estate Companies Listed on the Indonesia Stock Exchange 2014-2017)

This study aims to analyze the variables of political connection, profitability, firm size, leverage, and tax incentives on tax aggressiveness (ETR) after implementing the tax amnesty in Indonesia in 2016. The research used is qualitative. The population in this study is all Real Estate companies listed on the Indonesia Stock Exchange in 2014-2017. The sampling method used was the purposive sampling method, so that 35 real estate companies were sampled in this study with 4 2014-2017 financial statements so that there were a total of 140 research samples. The data analysis technique used in this study is a multiple linear regression model by testing descriptive statistics and classical assumptions. The results obtained in this study are that political connections, profitability, firm size, leverage, and tax incentives affect tax aggressiveness. The political connection does not affect tax aggressiveness. Profitability, firm size, and tax incentives positively and significantly affect tax aggressiveness. Leverage has a negative effect on tax aggressiveness. Keywords: political connection, profitability, firm size, leverage, and tax incentives, tax aggressiveness.

Equity-based incentive to coordinate shareholder-manager interests under information asymmetry

<p style='text-indent:20px;'>The shareholder's interest oriented from business operation relies on opportunism regulation of the manager under asymmetry. Effective motivation incentives should be exploited to facilitate the manager's effort devotion enthusiasms. This paper establishes a theoretic model in which the shareholder offers equity-based incentive to a fairness-preferred manager to coordinate their interest conflicts and maximize her expected revenue. The manager exerts unverifiable levels of efforts toward both decision and coordination tasks making the most of his private information about fairness preference. Two interrelated performance measures on different hierarchical levels are considered for contracting purposes. In each situation, we derive the equilibrium effort choices and incentive coefficients of both participants, and investigate how these decisions are affected by fairness preference. Research findings suggest that the incorporation of firm equity dominates pure profit incentive in eliciting high effort levels toward two distinctive managerial tasks. Besides, the equity-based incentive weakens the perceived unfairness and facilitates the participants' expected revenue. Comparative statics and numerical analysis are conducted to demonstrate our results and the effectiveness of the proposed equity-based incentive. Finally, we summarize the contributions of this paper and put forward directions for further study.</p>

Neoliberal governmentality, knowledge work, and thumos

Research has shown that the knowledge worker, the decisive driver of the knowledge economy, works increasingly longer hours. In fact, it would appear that instead of working to live, they live to work. There appears to be three reasons for this living-to-work development. First, the knowledge worker ‘has to’ on account of the pressure to become ever more efficient. Such pressure translates into internalized coercion in the case of the self-responsible knowledge worker. Secondly, working is constant, because the Internet and smart technologies and mobile devices have made it ‘possible’. It gives the worker the capacity and management omnipotent control. In the final instance, the neoliberal knowledge worker works all the time because s/he paradoxically ‘wants to’. It is a curious phenomenon, because this compulsive working is concomitant with a rise of a host of physical, emotional, and psychological disorders as well as the erosion of social bonds. The paradox is exacerbated by the fact that the knowledge worker does not derive any of the usual utilities or satisfactions associated with hard work. Elsewhere I have ascribed this apparent contradiction at the heart of the living-to-work phenomenon to the invisible thumotic satisfaction generated by knowledge work. In the present article, I argue that neoliberal governmentality has found a way to tether thumos directly to the profit incentive. I draw on Foucault’s 1978-1979 Collége de France lecture course in which he analysed neoliberal governmentality with specific emphasis on the work of the neoliberal theorist of human capital, Gary Becker.

Housing Insecurity in Binghamton

Housing is vital to the protection of individual human life and liberty, yet so many Americans find themselves housing insecure. This study examines housing insecurity in Binghamton, New York, its causes, and potential solutions through the use of interviews and participant observations. Despite the surplus of available housing and low demand, so many Binghamton residents find themselves struggling to afford their rent due to the presence of university students in the city and the profit incentives of landlords. Public housing solutions are the most effective at eliminating these particular issues under the conditions present in Binghamton’s circumstances, suggesting that the federal and local governments should focus housing policy more on providing housing directly to citizens in need rather than fostering private development.