Accelerated Depreciation and Investment Decisions by Managers

Accelerated Depreciation
Knowledge Center

 

Next Topic

Accelerated Depreciation > Best Practices > Accelerated Depreciation and Investment Decisions by Managers

Accelerated Depreciation and Investment Decisions by Managers
Anneke Zwart, Student (University), Netherlands, Moderator
The article Economic consequences of firms’ depreciation method choice: Evidence from capital investments investigates how the way of accounting depreciation is affecting managers’ capital investment decisions. The authors find that accelerated depreciation is related to high levels of capital investments of managers, because of the lower book value that results from accelerated depreciation. Four particular reasons for this effect are mentioned in this article: 1. It might be possible that the book value of an asset affects the perceived utility managers will bring in the future. Assets with higher book values are perceived to deliver a higher future utility, as a result that these assets’ replacement will be impeded. 2. If an asset has a high book value, managers are likely to suppose that replacing the asset is wasteful behavior in that case. For example, not fully utilizing a purchased asset is seen as unpleasant; consumers can even overuse a product so that they at lea (...) Read more? Sign up for free
 

Please register now to read all responses and to join this discussion yourself. It's easy and 100% free.

    Log in

 
Accelerated Depreciation not Recommended
rafael angel calvo arguedas, Business Consultant, Member
(...)
 

         
Special Interest Group Leader

Interested? Sign up for free.


Accelerated Depreciation
Summary
Forum

    Best Practices
    • Accelerated Depreciation and Investment Decisions by Managers


    Accelerated Depreciation
    Knowledge Center

     

    Next Topic



    About 12manage | Advertising | Link to us / Cite us | Privacy | Suggestions | Terms of Service
    © 2019 12manage - The Executive Fast Track. V15.2 - Last updated: 7-12-2019. All names ™ of their owners.