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We study the bargaining game between a tax agency and a tax advisor-taxpayer team. Specifically, we focus on the factors that motivate tax aggressiveness, and the role of tax advisors in tax aggressiveness. We begin by characterizing the conditions under which tax advisors would give aggressive advice to their clients. Next, we analyze the optimal number of bargaining rounds for the tax agency. Third, we study the counteroffers that the tax agency makes in each round of the bargaining game. In addition, we investigate the conditions under which a high-tax taxpayer type would hire a reputable tax adviser. Last, we analyze when would the taxpayer accept or reject the tax advisor's recommendation. [ABSTRACT FROM AUTHOR]

We study the effects of diversity in national culture on new technology ventures' founding teams on their financial harvest exit strategy. Exits represent a pivotal event in the entrepreneurial process that reflects the strategy and performance of technology startups. Following a quasi-replication of the seminal study of Chaganti and colleagues in 2008, aimed at generalizing their findings to different technologies and periods and assessing their robustness, we demonstrate that diverse founding teams are significantly more likely than non-diverse teams to exit via financial harvest. We add to the literature by identifying a novel contributing factor—diversity in national culture—in founding teams' financial harvest strategies. The economic implications, both at the micro and macro levels, of the diversity factor are considerable. The contribution of this study thus extends beyond the academic literature. [ABSTRACT FROM AUTHOR]

This study analyzes the impact of the Sarbanes-Oxley Act's (SOX) ban on providing both auditing and nonaudit services by auditors to their clients. We use a first-price private value auction to compare a setting in which auditors can compete for both audit and nonaudit services with an auction in which they can compete for only one of the two services. Consistent with empirical studies, we show that the ban on nonaudit services results in fee hikes for both audit and nonaudit services, as the number of bidders (audit firms) is smaller in the post-SOX setting relative to pre-SOX setting in both auctions. Consequently, we demonstrate that, after the ban, payoffs have increased for audit firms and decreased for their clients, due to the increase in both audit and nonaudit services fees. Finally, we show that increasing the penalty for an audit failure, contrary to common wisdom, results in improved payoffs for audit firms. [ABSTRACT FROM AUTHOR]

Relationship between venture capitalist and entrepreneur from inception onwards, is studied through multi-period game theoretic model with moral hazard where contract is set in the first period.

Leveraged buyouts, otherwise called private transactions, have been one of the most popular means of restructuring a firm's overall financial portfolio and ownership structure. However, managers must be able to consider a number of significant factors, including investor interest and external funding, in guaranteeing the success of these buyouts. It was stressed that the amount of effort exerted by a particular managers is directly proportional to the degree of monitoring employed by external equity investors.

A model of a multinational parent based in a home country that sells a non-marketed commodity only to a subsidiary operating in a foreign country has been developed. Special assumptions used to simplify the model help in deriving an optimal payment based on profit shares, transfer price and lump-sum transfer. The model shows that host countries can increase taxation rates on foreign firms if productivity and cost modifications induce lower effective corporate tax rates. It also shows that harmonization can lead to lower effective corporate tax rates.