Limited Liability, Asymmetric Taxation, and Risk Taking - Why Partial Tax Neutralities can be Harmful

We examine the combined effects of asymmetric taxation and limited liability on optimal risk taking of investors. Given an optimal risk level in the pre-tax case under full liability, loss-offset restrictions reduce, and limited liability enhances the incentives for taking risk. For every degree of limited liability we can find corresponding loss-offset limitations inducing the same optimal risk level as in the reference case. Thereby we get tax neutrality with respect to risk taking. We show that tax neutrality with respect to risk taking is incompatible with tax neutrality with respect to the choice of the legal form. In our model, full liability requires symmetric taxation and limited liability requires asymmetric taxation of profits and losses.limited liability, loss-offset, tax neutrality, risk taking

An Algorithm for Hardware/Software Partitioning Using Mixed Integer Linear

One of the key problems in hardware/software codesign is hardware/software partitioning. This paper describes a new approach to hardware/software partitioning using integer programming (IP). The advantage of using IP is that optimal results are calculated for a chosen objective function. The partitioning approach works fully automatic and supports multi-processor systems, interfacing and hardware sharing. In contrast to other approaches where special estimators are used, we use compilation and synthesis tools for cost estimation. The increased time for calculating values for the cost metrics is compensated by an improved quality of the values. Therefore, fewer iteration steps for partitioning are needed. The paper presents an algorithm using integer programming for solving the hardware/software partitioning problem leading to promising results

Steuern in Agency-Modellen: Mehrperioden- und Multi-Task-Strukturen

In diesem Beitrag werden sowohl persönliche Steuern des Agenten als auch die vom Prinzipal zu tragende Unternehmenssteuer in ein Agency-Modell des LEN-Typs integriert. Wir analysieren die Auswirkungen dieser Steuern auf die optimale Anreizgestaltung. Für das Grundmodell mit nur einer operativen Aktion des Agenten ergeben sich nur wenig qualitative Änderungen gegenüber einem Ansatz ohne Steuern. Wenn der Agent neben operativen Tätigkeiten auch Maßnahmen zur Steuervermeidung setzen kann, treten unerwartete Resultate auf. Wir zeigen verschiedene Steuerparadoxa auf, so z.B. den Effekt, dass sich die Zielerreichung des Prinzipals mit höheren Unternehmenssteuern auch verbessern kann oder dass steuerplanungsbedingte Maßnahmen nicht streng monoton steigend in der Höhe der Unternehmenssteuersätze sind. Die Resultate lassen sich aus den Wechselwirkungen von Motivation, Risikoteilung und dem Einfluß der Unternehmensbesteuerung auf die Varianz von Nachsteuer-Cash-Flows erklären. Paradoxe Steuerwirkungen können auch in einem Ansatz, in dem der Agent mit differenzierten Bonusparametern gesteuert werden kann, gezeigt werden.We analyze the effects of taxation on optimal incentive schemes by integrating individual income taxation at the agent's level and corporate taxation at the principal's level into a principal-agent model of the LEN type. The basic model with only operative managerial effort is very similar to the model in a world without taxes. If the agent can also provide tax planning effort, however, unexpected results emerge. We show various paradoxical tax effects. For instance, the principal's net profit can increase with increasing corporate tax rate. As another example of paradoxical tax effects, tax planning effort can be non-monotonous with respect to the corporate tax rate. These results can be explained by the interplay of motivation, risk sharing, and the impact of the tax rate on the variance of after-tax cash flows. Similar paradoxical tax effects can be derived in models with one or two bonus coefficients

Limited liability, asymmetric taxation, and risk taking: Why partial tax neutralities can be harmful

We examine the combined effects of asymmetric taxation and limited liability on optimal risk taking of investors. Given an optimal risk level in the pre-tax case under full liability, loss-offset restrictions reduce, and limited liability enhances the incentives for taking risk. For every degree of limited liability we can find corresponding loss-offset limitations inducing the same optimal risk level as in the reference case. Thereby we get tax neutrality with respect to risk taking. We show that tax neutrality with respect to risk taking is incompatible with tax neutrality with respect to the choice of the legal form. In our model, full liability requires symmetric taxation and limited liability requires asymmetric taxation of profits and losses

A Theory of Tax Avoidance - Managerial Incentives for Tax Planning in a Multi-Task Principal-Agent Model

We derive determinants of tax avoidance by means of a multi-task principal-agent model. We extend prevailing models by integrating both corporate and individual income taxation as well as by including tax planning effort in the agent's action portfolio. Our model shows novel and apparently paradoxical results regarding the impact of increased tax rates on efforts, risks, and incentive schemes. First, the principal's after-tax profit can increase with a higher corporate tax rate. Second, tax planning effort can decrease in the corporate tax rate. Third, operational effort can increase with increasing corporate tax rates. We show that differences in productivities, differences in operational and tax risk and the correlations of these risks are crucial determinants for the optimal degree of tax avoidance. These determinants can explain why some firms are more tax aggressive than others and should therefore be considered in empirical studies. Related to this insight, we demonstrate that our results are consistent with recent empirical evidence

Applying TOGAF to Define and Govern a Service-oriented Architecture in a Large-scale Research Project

The Service-oriented Architecture paradigm has become a widely adopted solution for enterprise application landscapes. SOA promises system integration improvement, business and IT alignment, applications reusability, and fast adaptability to changing requirements. Yet, the advantages that SOA offers lead to its main management challenges. An SOA consists not only of services. Business requirements, processes, models, rules, policies, and different stakeholders play also an important role. To manage this increased complexity and heterogeneity in SOA landscapes enterprises apply architecture frameworks and governance approaches. An essential enabler for SOA Governance is the traceable documentation of the service-oriented application landscape. This paper shows how the TOGAF Architecture Development Method was applied in a large-scale SOA-based research project to support the governance proposes in the context of a service marketplace. Supplementary templates were defined to guide the description of services, data models, and architectural components. Some of the models and decisions proposed by TOGAF were shifted to other phases to fit the innovative nature of research projects

Like-likes-Like: Cooperative Hydrogen Bonding Overcomes Coulomb Repulsion in Cationic Clusters with Net Charges up to Q=+6e

Quantum chemical calculations have been employed to study kinetically stable cationic clusters, wherein the monovalent cations are trapped by hydrogen bonding despite strongly repulsive electrostatic forces. We calculated linear and cyclic clusters of the hydroxy-functionalized cation N-(3-hydroxypropyl) pyridinium, commonly used as cation in ionic liquids. The largest kinetically stable cluster was a cyclic hexamer that very much resembles the structural motifs of molecular clusters, as known for water and alcohols. Surprisingly, strong cooperative hydrogen bonds overcome electrostatic repulsion and result in cationic clusters with a high net charge up to Q=+6e. The structural, spectroscopic, and electronic signatures of the cationic and related molecular clusters of 3-phenyl-1-propanol could be correlated to NBO parameters, supporting the existence of “anti-electrostatic” hydrogen bonds (AEHB), as recently suggested by Weinhold. We also showed that dispersion forces enhance the cationic cluster formation and compensate the electrostatic repulsion of one additional positive charge

Towards a Generic Governance Model for Service Oriented Architectures

Over the past years, Service-oriented Architecture (SOA) Systems have been recognized more and more as a serious alternative to common monolithic systems for Enterprise Architectures (EA). An SOA provides a flexible means of effectively mapping business processes to IT processes. However, large IT systems require consistent leadership – IT Governance. For SOAs, governance faces new challenges. A number of different approaches for SOA Governance Frameworks exist, which differ extensively in scope and capability, as most of them are product-driven and developed by software companies. In this paper, we outline and compare existing SOA Governance approaches and present our approach - a Generic Governance Model for SOA

Towards a Consistent Service Lifecycle Model in Service Governance

Introducing an SOA in a company brings new challenges for the existing management. Small loosely coupled services allow the Enterprise Architecture to flexibly adapt to existing business processes that themselves depend on changing market environments. SOA, however, introduces a new implicit system complexity. Service Governance approaches address this issue by introducing management processes and techniques, and best practices to cope with the new heterogeneity. Service lifecycle management is one aspect. Existing definitions of service lifecycles vary greatly.. In this paper, we compare existing service lifecycle approaches concerning defined phases and process. In particular, we challenge the purpose of the distinctions made between design time, runtime, and change time. Concluding, we propose a consolidated service lifecycle model for usage in Service Governance