Economic consequences of firms' depreciation method choice: Evidence from capital investments

• 成果类型: Article
• 署名作者: Jackson, Scott B.; Liu, Xiaotao (Kelvin); Cecchini, Mark
• 署名单位: University of South Carolina System; University of South Carolina Columbia; Northeastern University
• 刊物名称: JOURNAL OF ACCOUNTING & ECONOMICS
• ISSN/ISSBN: 0165-4101
• DOI: 10.1016/j.jacceco.2009.06.001
• 发表日期: 2009
• 关键词: decision; MARKET; replacement; incentives; PSYCHOLOGY; COMMITMENT; selection

摘要

This study identifies several interrelated reasons why firms' depreciation method choice is likely to influence managers' capital investment decisions. We find that firms that use accelerated depreciation make significantly larger capital investments than firms that use straight-line depreciation. Further, we find that there has been a migration away from accelerated depreciation to straight-line depreciation over the past two decades. Firms that make such accounting changes make smaller capital investments in the postchange periods than in the pre-change periods. These results suggest that a choice made for external financial reporting purposes influences managers' capital investment decisions. (C) 2009 Elsevier B.V. All rights reserved.