Stakeholders' implicit claims and accounting method choice

Stakeholders' implicit claims and accounting method choice Based on theory and anecdotal evidence, we argue that ongoing implicit claims between a firm and its customers, suppliers, employees, and short-term creditors create incentives for management to choose long-run income-increasing accounting methods. Variables selected to proxy for the extent to which a firm depends on these implicit claims are found to be significant in explaining cross-sectional variation in inventory and depreciation methods. These variables remain incrementally significant when we include traditional variables found to have explanatory power in prior studies (i.e., leverage, bonus compensation, tax, and regulatory/political exposure variables). http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Accounting and Economics Elsevier

Stakeholders' implicit claims and accounting method choice

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Publisher
Elsevier
Copyright
Copyright © 1995 Elsevier Ltd
ISSN
0165-4101
DOI
10.1016/0165-4101(95)00404-1
Publisher site
See Article on Publisher Site

Abstract

Based on theory and anecdotal evidence, we argue that ongoing implicit claims between a firm and its customers, suppliers, employees, and short-term creditors create incentives for management to choose long-run income-increasing accounting methods. Variables selected to proxy for the extent to which a firm depends on these implicit claims are found to be significant in explaining cross-sectional variation in inventory and depreciation methods. These variables remain incrementally significant when we include traditional variables found to have explanatory power in prior studies (i.e., leverage, bonus compensation, tax, and regulatory/political exposure variables).

Journal

Journal of Accounting and EconomicsElsevier

Published: Dec 1, 1995

References

  • Testing the impact of recalls on the demand for automobiles
    Crafton, S; Hoffer, G; Reilly, R
  • Developing buyer-seller relationships
    Dwyer, F; Schurr, P; Oh, S
  • LBOs, reversions and implicit contracts
    Ippolito, R; James, W
  • Accounting information, employees and collective bargaining
    Maunders, K; Foley, B
  • Will retarding the information flow on automobile recalls affect consumer demand?
    Reilly, R; Hoffer, G
  • Asymmetric information, bank lending, and implicit contracts: A stylized model of customer relationships
    Sharpe, S
  • The determinants of capital structure choice
    Titman, S; Wessels, R

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