The association between investment opportunity set proxies and realized growth

Article Abstract:

Empirical evidence implies a negative correlation between investment opportunity set proxies and realized book value growth. An analysis of different investment opportunity set proxy variables confirms this relationship, with Tobin's-Q(super -1), book-to-market value of assets and equity and ratios of fixed assets and depreciation expense to market value showing a negative relation with realized growth. In contrast, capital investment activity based on the capital expenditures to assets ratio is positively associated with realized growth.

Accounting Methods, Stocks, Accounting, Investments, Book value (Accounting)

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How do small firms make inventory accounting choices?

Article Abstract:

An analysis of small business firms' inventory accounting procedures is presented. The analysis follows earlier research findings which describe large firms' preference for the last in first out (LIFO) inventory method. Small firms require their own accounting techniquebecause of financial reporting differences. It is shown that firm size, financial risk and the relation between financial and business risk affect small firms' selection of the LIFO method.

Small business

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An examination of debt-equity proxies vs. actual debt covenant restrictions in accounting choice studies

Article Abstract:

The relative performance of the debt-to-equity ratio is compared with actual accounting-based debt covenant restrictions. Findings showed that the presence and tightness of covenant provisions are influenced by inventory method choice. This indicates that the debt-to-equity ratio may be proxying for variables other than covenant-related provisions. Such variables are difficult to identify.

Proxy

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