Evidence on the determinants of accounting procedure choice by regulated firms.
详细信息
文摘
The purpose of this research is to examine factors which motivate managers' accounting choices in regulated and industrial firms. Managers have the opportunity to choose among various accounting alternatives how to recognize business transactions which are summarized in the financial statements. Prior to this study, three primary hypotheses have been theorized and researched to establish which factors influence accounting choice--the debt/equity hypothesis, the bonus plan hypothesis, and the size hypothesis. Most accounting researchers have limited their tests of these hypotheses to solely include samples of companies in non-regulated industries. The primary questions of interest in this research are: (1) Are there significant differences between the economic variables that influence the individual and accounting choice portfolio in manufacturing industries and the economic variables that influence the individual and accounting choice portfolio in regulated industries? Is there significant variability in the accounting choice for inventory, depreciation, and capitalizing interest among rate-regulated firms? (2) With the advent of alternative regulation, are there any changes in the economic variables that influence the individual and accounting choice portfolio selected by rate-regulated firms?;The intent of this research is: (1) to determine if regulated firms should be excluded from research considerations; and (2) to determine if regulation had any effect on the individual and portfolio of accounting alternatives chosen. Traditional firm specific variables that had been previously shown to influence managers, accounting decisions are examined. Data was collected from COMPUSTAT - Research Insights and 10-K reports to test the hypotheses using LOGIT on models similar to the Zmijewski and Hagerman (1979, 1981) cross-sectional models. Zmijewski and Hagerman used both single accounting choices and a portfolio of accounting choices to evaluate the association between economic variables and the choice of accounting technique. The results indicate that accounting choice in regulated firms is more an industry standard than a product of economic influences. Opposite results are indicated with industrial firms. The advent of alternative regulation did not alter the conventions in the regulated sample population. The LOGIT models did not find any evidence that rate-regulated firms should be excluded from research samples.