Volume 13, Issue 3

The growth of the informal sector in African countries has largely been viewed as an escape from regulation and deliberate intention to avoid paying taxes and these views have been widely popularised, ignoring significant details to the disadvantage of realistic tax policy design. Zimbabwe adopted a presumptive tax system for various informal sector categories to enlarge the tax base and increase tax revenues mobilised. However, presumptive taxes have not generated significant revenue. Tax compliance in the informal sector has often been studied from the tax structure design, the deterrence model perspective and capacity limitations without paying adequate attention to tax morale. Tax morale can be denoted through the peer effect of the compliance behaviour of other taxpayers, the fulfilment of the psychological social contract, transparency and accountability in the use of tax revenues as well as stakeholder communication, built on mutual trust and respect. In light of these tax morale dimensions, it is evident that tax compliance can never be divorced from the intrinsic motivation to pay taxes. The inextricable link, between tax evasion, tax compliance and tax morale, motivates this study. While previous studies on tax morale have applied single method research approaches, this study adopted a sequential exploratory mixed method research design, combining both qualitative and quantitative (through the use of document reviews, semi-structured interviews and questionnaires) in order to bring a balanced view. The study found out that tax morale was a strong driver of tax evasion and non-tax compliance in the informal sector.

As an outcome of the scientific conflict within business valuation theory in the German-speaking area, New Political Economy of Business Valuation has developed a possible approach to explain the dissemination of neoclassical valuation concepts in theory and practice. This explanatory model, designed by Quill (2016), is extended by Follert (2020) to include the share valuation in squeeze-out cases for the compensation of minority shareholders. For this purpose, the different actors in the legal mediation procedure (“Spruchverfahren”)—the judge, the auditor as expert, and the conflicting parties—are modeled based on their stereotypical interests. The aim of the present paper is to introduce international scientific community to the scientific conflict between the proponents of investment-theoretical and those of the finance-theoretical conception, and to discuss the role of judicial decision-making from a legal-economic perspective. We would like to illustrate why a judge could benefit from the use of finance-theoretical valuation methods based on the neoclassical capital asset pricing model recommended by the relevant standard (so-called standard 1) of the “Institut der Wirtschaftsprüfer in Deutschland IDW” (Institute of Public Auditors in Germany) (“IDW S 1”). The analysis takes a socioeconomic perspective and argues that judicial valuation is primarily influenced by the judges’ tendency to promote their own reputation and by social pressure from their professional environment and different interest groups. This paper adds a further perspective to New Political Economy of Business Valuation . Moreover, the close link between jurisprudence, economics and business economics theory is pointed out. Although the approach presented deals with the squeeze-out under German law, it may be applicable to squeeze-out arrangements in other countries as well, as long as the basic assumptions apply in their legal systems.

“Substance over form” is a traditional accounting maxim that has also influenced legal thinking and has its roots in classical philosophy. “Substance over form” states that accountants do not record transactions based on the outward form of the transaction but discern its economic substance and report accordingly. Nevertheless, “substance over form” has been deemphasized by the FASB’s conceptual framework in recent decades, to the point that an internal debate now rages over whether accountants and auditors have a right and responsibility to put substance over form. FASB must therefore make its position clear on where it stands in this debate.

This essay is a comment on the paper authored by Fischer, Ellman and Schocet (2021, The decline of substance over form in accounting. Accounting, economics, and law: A convivium . (2023)) who argue that the trend in financial reporting regulation involves de-emphasizing the important of economic substance relative to form in how auditors are to perceive their role. The danger foreseen by the authors is the further shrinking of the leeway for professional judgment, which is an important hallmark of a true professional. Agreeing the authors have raised a crucial issue for any group claiming professional status, I try to add to the discussion by pointing out that form and substance in the realm of financial reporting regulation are not antipodes but complementary parts of a process of continuous redefining of what economic substance is. Social reality is socially constructed and as such choices of form made by humans effectively shape substance. Given the capture of accounting by economics during the 1960s, accountants have lost an appreciation for the tentativeness of economic substance and now serve not as participants in shaping economic substance but as enforcers of an imaginary economic substance that derives from the assumptions and values in the ideology of neoclassical economics.

This an apologia to Williams, P. F. (2022). The decline of substance over form in accounting: A problematic dichotomy. Accounting, Economics, and Law: A Convivium critique of Fischer, D., Ellman, O., & Schochet, S. (2021). The decline of substance over form in accounting. Accounting, Economics, and Law: A Convivium , 20190052 article about the decline of substance over form in accounting. The concept of “substance over form” has traditionally been a guiding principle for practicing accountants. In recent years, FASB has taken away the prerogative from individual practitioners to organically evolved GAAP. In the pre-FASB era, GAAP was indeed a bottom-up generally-accepted framework. Nowadays, FASB appropriates to itself the privilege to decide when form conforms with economic substance and when form should be bent to correspond to accounting theory.