Excess Profits Research Articles

The excess profits during COVID-19 and their tax revenue potential

The excess profits during COVID-19 and their tax revenue potential

Economic outcomes and evaluation of market power of enterprises

Equitable distribution of society's resources is impossible without controlling monopolies. This is especially true of state-owned enterprises, which, in addition to inflated prices, often have the ability to use the resources received inefficiently. In order to control the market power of enterprises, scientists have already developed many approaches to analysing the market structure and assessing the level of its concentration. At the same time, the problem of formal numerical assessment of the degree of market power of enterprises remains insufficiently resolved. One of the most important areas of assessing the market power of an enterprise is the analysis of its economic results. The essence of this assumption is quite simple: the higher the level of market power an enterprise has, the more independent it is in setting higher prices, which lead to excessive profits. This paper does not consider possible sources and causes of market power related to product uniqueness, cross elasticity of demand or market structure. The purpose of the paper is to find a way to assess market power according to performance indicators that are derived from and result from the use of market power by an enterprise. However, a study of the existing methods of assessing the level of market power of an enterprise has shown that there is no single approach to determining the degree of market power of an enterprise, despite the unambiguous dependence. Most methods propose to use profitability as a basis, but there is a variety of views on how to calculate this indicator. While the first component of profit, revenue or the price of goods, is a fairly objective indicator, the greatest difficulties are found in understanding and applying cost elements to calculate profitability as a measure of market power.

Profit Tax as a Character of Regional Budget of Our Time

The authors develop approaches to tax decentralization based on the theory of imperfect institutions by T. Eggertsson, in terms of the critically important profit tax for regional budgets of Russia. We see the goal of our research in finding a balance between the action of formal rules and informal, social norms, technologies, and models for distributing the profits of the largest Russian companies as a tax base between the federal center of Russia and the regions depending on the actual location of employees and assets. The article is devoted to the action of a successful and unique formal rule of the tax institution for the Russian Federation – the formation of consolidated groups of taxpayers (CGT). The novelty of the article lies in the study of the phenomenon of transformation of the domestic system of paying profit tax in 2023 as a replacement of one formal rule (action of CGTs) with another formal rule – the introduction of a new excess profit tax for Russia. An empirical study of the regional distribution of payments of legal entities-payers of profit tax according to the formal rules of the CGTs from among the largest Russian companies registered outside Moscow was conducted. Based on the results of the study, a general conclusion was made about the acute contradiction of the current economic policy in Russia in the content of the tax institution: between the new informal social norm on territorial decentralization of the largest Russian companies and the opposite formal rules of tax centralization in terms of profit tax. In this regard, the current policy of coincidence of territorial and tax decentralization in terms of state-owned companies in China deserves attention.

Investigate The Influence Of The Fama and French Five-Factor Model On The SRI-KEHATI Stock Index

The capital market functions as an intermediary for the flow of funds between investors and companies, in accordance with the general principle that the greater the risk, the greater the potential profit. In estimating returns, there are several methods, one of which is the Fama French five factor model which was developed from the CAPM, APT and Fama French three factor models. This research aims to evaluate the relationship between the five-factor Fama French model and excess returns on the SRI-KEHATI stock index from 2015 - 2022. This research method adopts quantitative analysis with an associative causality approach and uses a purposive sampling technique to select 9 companies as samples. Data analysis used by Eviews 12. Study findings show that market factors have a significant influence on excess returns, while size, value, profitability and investment factors are not significant on excess returns. Overall, the Fama-French model's five factors collectively influence excess returns. This finding confirms that market conditions will influence the excess returns obtained by investors.

Research on the Dynamic Evaluation of the Competitiveness of Listed Seed Enterprises in China

Seed enterprises are crucial for ensuring national food security, the driving force behind the seed industry’s advancement, and the core entity in constructing a modern seed industry system. At the micro and macro levels, agricultural seed enterprises face challenges and pressures in earning excess profits, enhancing their competitive edge, and resisting the incursion of multinational seed enterprises. This article selects panel data from 49 listed seed enterprises in China from 2015 to 2022 and uses methods such as global principal component analysis (GPCA) and Q-type cluster analysis to measure and evaluate the competitiveness of Chinese seed enterprises. Research has found that: (1) From 2015 to 2022, the overall competitiveness of listed Chinese agricultural seed enterprises has shown an upward trend. The competitiveness of agricultural seed enterprises can be further decomposed into operational capabilities, growth capabilities, production efficiency, technological innovation capabilities, etc. (2) The top ten agricultural seed enterprises in China have obvious advantages in operational and technological innovation capabilities, but their growth capabilities and production efficiency are insufficient. (3) Regarding the vertical comparison of the seed industry, the ranking of the competitiveness of Chinese listed agricultural seed enterprises from strong to weak is wheat seed enterprises > other seed enterprises > melon and vegetable seed enterprises > corn seed enterprises > rice seed enterprises. (4) Compared with international seed industry giants, there are various reasons why China’s top agricultural seed enterprises have weaker competitiveness, specifically reflected in research and development investment, scale and market share, industrial layout, and other aspects. The findings of this research offer empirical evidence to bolster the competitiveness of seed enterprises and advance the seed industry, while also aiding in fortifying the nation’s strategic oversight of the seed sector, bearing profound implications for safeguarding food security.

재건축초과이익환수제도의 존재와 폐지의 담론

According to the management status of apartment complexes in Seoul at the end of 2023, there are 960 apartment complexes that are over 30 years old, accounting for 25.4% of the total, and the number of apartment complexes that will be over 30 years old within the next 10 years is expected to reach 57.5%. Therefore, it is expected that the controversy over reconstruction will continue in the future. However, in 2006, the Act on Recovery of Excessive Reconstruction Profits came into effect, and the Reconstruction Excessive Profits Recovery System, which recovers up to 50% of development profits resulting from reconstruction, has consistently raised unconstitutional claims regarding infringement of property rights, violation of the principle of equality, and double taxation. It has been done. Under this background, the National Assembly proposed on June 5, 2024, the 'Abolition of the Act on the Recovery of Reconstruction Excess Profits', which would abolish the recovery of excess profits from reconstruction. Recently, the Minister of Land, Infrastructure and Transport also stated his position that the comprehensive real estate tax and reconstruction excess profit recovery system should be abolished. Therefore, this study examines the theoretical discourse on the maintenance or abolition of the reconstruction tax profit recovery system, which is the subject of controversy.

To Hinder or to Facilitate: Retailers’ Strategy of Consumer Information Sharing

Consumer information sharing is considered an effective strategy to attract consumers, yet certain high-end retailers, such as Bergdorf Goodman and Farfetch, tend to hinder consumers from sharing information through online reviews. We study a retailer’s strategy for consumer information sharing in a supply chain. We find that a retailer’s information sharing strategy can prevent manufacturers from extracting excessive profit when consumers are heterogeneous in their valuations of the selling product. Specifically, a retailer can achieve a higher profit margin by targeting all consumer segments. By strategically choosing the information sharing strategy to influence consumer beliefs, the retailer can induce the manufacturer to conform to the retailer’s preferred targeting segment through a low wholesale price. Thus, a high-end retailer, whose consumers have a high ex-ante quality belief, favors hindering information sharing among consumers because it enables the retailer to target all consumer segments. Interestingly, deterring consumers from learning about the product quality may generate more consumer surplus. Our main results are robust under extensions such as consumer search behavior, consumer waiting, and multiple product selling. When selling multiple products, a retailer with a large quality variation is better off hindering consumers from sharing information. Our work shows that strategically choosing a consumer information sharing strategy enables retailers to enhance profit margins in their interactions with upstream manufacturers.

Improving Supply Security: Guidelines and Policy Proposals

Abstract Supply security is threatened by technical, business, natural and policy shocks, as well as geopolitical tensions. Is there a rationale for policy intervention? If yes, what are efficient and effective measures that achieve de-risking? This article first explains why private incentives do not generally lead to an optimal diversification of supply sources, and then discusses measures that strengthen protection against and resilience in the face of shocks. Governments should refrain from policies that further disincentivise diversification such as the ex post skimming of excess profits when adverse shocks force the halt of production and should work on framework conditions that facilitate diversification. Importantly, most measures are best taken at the EU level.

Goodwill Valuation Enhancement through Capitalization Method and Statistical Impact Analysis

The valuation of Goodwill (GW) has remained one of the several critical issues in financial analysis. This aspect is particularly important for mergers and acquisitions due to the significance of intangible assets. This study delves into the capitalization method of super profit (CMSP), a prominent technique for GW valuation, enhanced by the integration of statistical tools. Assessing a company’s excess profits over its average return on tangible assets is part of the CMSP. Finding the variables that have a significant impact on GW valuation, such as average profit, capital employed, and rate of return, is the main goal of this research. These issues are thoroughly investigated through statistical analysis to give stakeholders useful information for well-informed decision-making. Additionally, the study seeks to identify the external elements influencing this process as well as the internal aspects influencing GW valuation. Regression analysis, correlation matrices, response analysis and ANOVA are used to improve GW assessment and comprehension of the complex relationships between different factors.

Price-Cost Margins, Fixed Costs and Excess Profits

Abstract This paper provides a new method to estimate price-cost margins in the presence of fixed costs of production. By exploiting properties of the primal and dual sales-based and cost-based Solow residuals, we are able to simultaneously estimate price-cost margins and the share of fixed costs in total costs for each input. Ignoring fixed costs in production underestimates price-cost margins and overestimates excess profit shares. Using a thirty-year panel of Belgian firms, we estimate price-cost margins, as a fraction of sales, of 25.4% on average, which can be decomposed between fixed costs of 22.9% and excess profits of 2.5%. Belgian price-cost margins have declined (−5.9%) in the past three decades due to a combination of falling fixed costs (−4.0%) and decreasing excess profits (−1.9%), suggesting that output markets have become even more competitive over time. While large firms have higher profit shares than small firms, they have lower fixed cost shares as well as lower price-cost margins.

Criticism of the short-term event analysis method in evaluating the effectiveness of mergers and acquisitions

The article presents the analysis of the contemporary theoretical and empirical research devoted to evaluation of the effectiveness of mergers and acquisitions by means of short-term event analysis method, managers’ motivation in making decisions on the acquisition of other companies from the perspective of the timing of the expected effect; it adduces and systematizes the limitations of the cumulative abnormal returns (or CARs) method. The authors carry out scientific synthesis of the limitations of the method of capabilities of accurate prediction of the final results of transactions. In particular, the following problems of the CARs method have been identified: determining the date of the event, determining the event window, inconsistencies in research results, outflow of funds from purchasing companies during mergers and acquisitions, arbitrage trading strategies, the lack of long-term predictive value of the method of accumulated excessive profitability, efficient market hypotheses, overcharging of the purchasing company shares. The authors have made a conclusion about possible inaccuracy of the method if used to evaluate the effectiveness of mergers and acquisitions.

Adjustments of VAT and income tax of banks

Subject. The article discusses excess profits of Russian banks in the amount of the planned Federal budget deficit in 2023, and financial relationships between banks and the budget as causes of excess profits. Objectives. The focus is on fairer taxation of commercial banks, using the case of the largest of them, and based on the latest experience of other countries. Methods. The study employs the comparative analysis of other countries’ practice on modifying the taxation of super profits of banks, financial analysis of reports of the largest banks regarding the specifics of the main taxes. Results. The article shows a zero net impact on the budget from bank operations. Budget payments by banks include income tax, tax on dividends, dividends to the State owned shares. Indirectly banks pay VAT on interest on corporate loans, interest on treasury funds in banks. Payments from the budget to banks include OFZ coupons and interest rate subsidies, banks earn margin on the treasury funds, zero VAT tax expenses on bank transactions with individuals. The international experience shows that other countries actively modify taxes on banks’ super profits. Italy and Spain introduced special taxes on banks, Brazil – a tax on financial transactions, Germany and Britain raised income tax rates, the U.S. regularly collect multi-billion dollar fines, France levies VAT on banks and encourages the European Union to do so. Conclusion. The fiscal effect of my proposals is about 1 trillion rubles, or one-third of the budget deficit. I offer to abolish zero VAT on bank operations with individuals, based on excess profits of banks, social inequality, and digitalization of tax control. Income tax for banks should be a minimum of 1% of risky assets, and it can be used to directly subsidize interest rates at the level of specific banks.

The evolution mechanism of green products supply and demand in a demand‐driven market

AbstractPromoting the production and consumption of green products is one of the essential ways to achieve sustainable development. However, although some studies have explored the evolution mechanism of the supply and demand system, these scholars have not noticed that in today's prosperous economy, demand‐driven markets have become mainstream in many countries. This paper establishes an evolutionary game model with producers and consumers in a demand‐driven market and analyzes the evolution mechanism of the system. The results indicate that (1) producers are willing to produce green products only if they can obtain excess green profits; (2) the lack of supply is the critical factor hindering consumers from purchasing green products; (3) additionally, there are multiple evolutionary paths under different substitution relations of different products; (4) interestingly, green premium and the consumers' sensitivity can simultaneously mitigate the perceived losses even when green products are insufficient. The theoretical and practical implications of these findings are further discussed.

2023: The Year of State Aid Developments

In this article, the author discusses landmark State aid cases, in particular developments during the September 2023 to December 2023 period. The author focusses not only on the most recent updates but creates a one-stop-shop guide where the reader can access the entire narrative on the State aid cases regarding Amazon, Apple, the Belgian Excess Profit Scheme, Engie and the Spanish Amortization Scheme.

PERSEPSI PENGURUS MASJID TENTANG PRODUK TABUNGAN BANK SYARIAH DAN MINAT MENABUNG DI BANK SYARIAH (Studi di Kelurahan Simpang IV Sipin Kecamatan Telanaipura Jambi)

This study aims to: (1) to find out how the perception of mosque administrators towards Islamic bank savings products (2) to find out how mosque administrators are interested in saving their mosque funds to Islamic banks. The method used to collect data in this study is through interviews, observation and documentation. In this study, the research objects used were 9 mosques in the Simpang IV Sipin Telanaipura area. The results of this study are that the mosque administrators in the Simpang IV Sipin Telanaipura area there are still some mosque administrators who do not really understand the products issued by Islamic banks, 6 out of 9 mosques studied that the administrators have the perception that Islamic bank products are good, guaranteed by the sharia which is free from usury elements. While the other 3 mosques mosque administrators perceive that Islamic bank products are not much different from conventional banks, they assume that as long as conventional banks do not take excessive profits from customer savings, it is still different if they take profits beyond the limit. Furthermore, as many as 6 mosques, the administrators are interested in saving the mosque funds that they manage in Islamic banks. Meanwhile, as many as 2 mosques, the administrators are not interested in saving the mosque funds that they manage in Islamic banks, they prefer conventional banks. If it is percented, 67% of mosque administrators are interested and 22% of mosque administrators are not interested. Mosque administrators who do not save in Islamic banks because they save in conventional banks, they have the perception that Islamic banks have complicated requirements, difficult and long arrangements, which is why they prefer conventional banks. And 1 mosque administrator is not interested in either Islamic banks or conventional banks, if percented by 11%. The implication of the findings of this study is that it is necessary to follow up on efforts related to increasing public knowledge of Islamic financial products for the better development of Islamic banking, mosques and society.

Development of flexible supportive policy with real options for renewable energy projects: Case of photovoltaic systems

Climate change and environmental crises as primary drivers of renewable energy development were invigorated uncertainties in the fossil fuel supply chain and price. Managing these uncertainties needs more flexibility in supportive policies. The minimum revenue guarantee and total income cap as two options are used in this research for renewable energy development. The diminution of government role in addition to replacement of fixed prices, like feed-in tariffs, with price range are the main peers for having flexible supportive policy. Application of options provide a range for the profitability of investments and assures that as well as guaranteeing a minimum income, excess profits are limited so the reliability in market prices is increased. Introducing options beside evaluating related projects with binomial lattice, contributes a basis for innovation in overcoming obstacles of PV development. Profitability index is used as a comprehensive measure for modifying time horizon, uncertain variable and target prices in flexible power purchase agreements. However, obtaining to a flexible power purchase agreement needs consideration of different factors, this research paved the way by proposing a novel method of applying real options in renewable energy development for risk management, especially the price risk as a major concern in such investments.

Специфика налога на сверхприбыль

The article discusses the specifics and legal nature of the excess profit tax. The legal construction of the excess profit tax as a one-time direct tax is analyzed. The place of the tax on excess profits in the system of taxation of organizations is considered. Conclusions are drawn about the significance of the excess profit tax for the mobilization of financial resources. Using the example of the excess profit tax, it is shown that the tax system is developing dynamically, responding to modern challenges, and ensures the functioning of the country's financial system.

Ethical entrepreneurship: Islamic financial principles for Small and Medium Enterprises (SMEs)

Islamic ethics prescribe its followers to zealously guard their behavior, words, thoughts, and intentions and observe certain norms and moral codes in their financial transactions; in their social affairs; and in private and public life. The unique feature of the Islamic ethical system is that it permeates all spheres and fields of human life. Islam therefore has its own distinctive value-based ethical system for finance dealings. It prescribes certain specific guidelines governing finance ethics, which are dictated primarily by the notion of halal (lawful or permitted) and haram (unlawful or prohibited) as per Islamic jurisprudence (fiqh). The current global economic meltdown is a clear revelation of the shortcomings of the conventional financial set-up and the weakness of self-designed system devoid of spiritual and divine guidance, hence the yearning and desire for a socially just financial system by conscious individuals and corporate bodies. The assertion that Islamic financial system is only distinguished from other economic systems in its emphasis on interest free and other usurious transactions coupled with the fact that many concepts are springing up contending with the Islamic financial system inform the need to study the system within the context of Islamic ethical principles. This paper is therefore out to articulate the ethical principles of financial institutions as enshrined in the Qur’an and the Sunnah of the Prophet so that Islamic financial system will not lose focus and to avoid being carried away by the flamboyant and excessive profits and surpluses of the conventional financial institutions.

Can stakeholders’ attention to innovation promote corporate innovation?

PurposeGiven the significance of innovation in enabling firms to maintain a long-term competitive edge and secure excess profits, this paper aims to investigate whether and how stakeholders’ attention to innovation (SATI) influences corporate innovation.Design/methodology/approachThis paper introduces a novel variable, SATI, which is achieved by segmenting stakeholders’ attention into two categories: attention to innovation and attention to other facets, using textual analysis methods. Subsequently, this paper empirically examines the influence of SATI on corporate innovation.FindingsThis paper finds that SATI positively affects corporate innovation input, and the result remains true after addressing possible endogeneity issues using instrumental variable regression. Furthermore, the positive effect of SATI on corporate innovation is stronger in firms facing greater financing constraints, thus verifying the financing constraints hypothesis. The positive effect is also stronger in firms with lower risk-taking levels, thus confirming the innovation failure tolerance hypothesis. Further analysis suggests that SATI increases both corporate innovation output and efficiency, thus ruling out the catering hypothesis.Originality/valueThis paper highlights the importance of SATI in driving corporate innovation. It enriches the literature on the repercussions of stakeholders’ attention and determinants of corporate innovation. In addition, it provides practical suggestions for further implementing China’s national innovation-driven development strategy.

Evaluation and screening of technology start-ups based on PCA and GA-BPNN.

Due to the existence of information opacity, there is a common problem of adverse selection in the process of screening alternative technology start-ups (TSs) and determining investment targets by venture capital institutions, which does not reveal the true value of enterprises and makes the market inefficient. The aim of this paper is to design an evaluation and screening system help venture capital institutions to select the qualified TSs as their investment objective. A research framework of four dimensions that include conception, technical innovation, business model and team structure, was built based on previous studies. Based on the research framework, 15 second-level indicators and 33 third-level indicators were extracted with literature research method. This paper proposes an evaluation model with back propagation neural network (BPNN) optimized by genetic algorithm (GA) to improve the rate of selecting and investing in qualified start-ups. The results show that the evaluation accuracy of the evaluation model for qualified and unqualified enterprises can reach 80.33% and 93.67% respectively, which has verified the effectiveness of the model and algorithm. This paper established an effective evaluation system based on PCA and GA-BPNN to help venture capital institutions preliminarily screen potential technology start-ups, which provides the possibility for venture capital institutions to greatly reduce the screening time and cost, improve the screening efficiency of TSs, and scientifically assess the risk of investee projects or investee enterprises to obtain sustainable and stable excess profits.