The main purpose of this paper is to provide an introduction to artificial neural networks (ANNs) and to review their applications in efficiency analysis. Finally, a comparison of efficiency techniques in a non-linear production function is carried out. The results suggest that ANNs are a promising alternative to traditional approaches, econometric models and non-parametric methods such as data envelopment analysis, to fit production functions and measure efficiency under non-linear contexts.

In this study, we investigate the relationship between tax avoidance and earnings management in the largest five European Union economies by using artificial neural network regressions. This methodology allows us to deal with nonlinearities detected in the data, which is the principal contribution to the previous literature. We analyzed Compustat data for Germany, the United Kingdom, France, Italy, and Spain for the 2006–2015 period, focusing on discretionary accruals. We considered three tax avoidance measures, two based on the effective tax rate (ETR) and one on book-tax differences (BTD). Our results indicate the presence of nonlinear patterns and a positive, statistically significant relationship between discretionary accruals and both ETR indicators implying that when companies resort to earnings management, a larger taxable income—and thus higher ETR and lesser tax avoidance– would ensue. Hence, as also highlighted by the fact that discretionary accruals do not appear to affect BTD, our evidence does not suggest that companies are exploiting tax manipulation to reduce their tax payments; thus, the gap between accounting and taxation seems largely unaffected by earnings management.

This article examines the determinants of local tax rates. For the two main local taxes in Spain—the property tax and the motor vehicle tax—we test the existence of tax mimicking, yardstick competition, and political trends in a sample of 2,713 municipalities. Using various spatial models, the results support the hypothesis of tax mimicking, with coefficients above 0.40. We also show the relevance of political variables such as the ideology of incumbents and political fragmentation. The fact that incumbents with weaker political support exhibit stronger mimicking behavior is interpreted as evidence in favor of yardstick competition. Finally, we find that incumbents mimic neighboring municipalities ruled by the same political party, confirming the political trends hypothesis. (JEL C31, H71, H77)

In this work we study the determinants of the effective tax rates for corporate taxation in countries of the European Union. First, we carry out an exhaustive review of the empirical literature where no consensus is reached about the signs of the determinants and we can observe that in the case of the European countries this topic has scarcely received attention, contrary to the US case. Then from the Compustat database and for the period 1992–2009, we estimate quantile regressions that allow possible nonlinear relationships to be detected. The estimations reveal different effects of factors such as size, debt, asset composition and profitability on the effective corporate tax rate depending on the decile. In short, for companies with lower ETRs, the most influential variables are the size, the intensity of inventories and the profitability, whereas for the companies that suffer the highest fiscal pressure it is debt that turns out to be the strongest determinant. These results justify the employment of quantile regression instead of the traditional linear approximations. DOI: http://dx.doi.org/10.5755/j01.ee.25.5.4531