Use of accounting product-costing systems in making production decisions

Article Abstract:

J.W. Dickhault and J.C. Lere developed a heuristic decision-making theory to explain the role of accounting product-costing information in production quantity decisions. The Dickhault-Lere (D-L) theory posited that decision makers laboring under a plausible heuristic production-decision process would, at times, prefer absorption costing to variable costing, for its accurate predictions of production quantities. Research utilizing a behavioral theory based on the D-L theory analyzing the effect of accounting product-costing system choice and use on production decisions indicates that subjects tend to chose the product-costing system predicted by the D-L theory. Subjects generally choose the final production quantities that are predicted by the heuristic and moved the production quantity in the direction that was predicted by the heuristic.

Accounting and auditing, Production control, Direct costing, Dickhaut, J. W., Lere, J. C.

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Foreign tax credit limitations and capital structure decisions

Article Abstract:

A study was conducted to further investigate the impact of foreign tax credit restrictions on organizational capital structure decisions using data gathered on 339 public offerings by multinationals of domestic debt, common stock and preferred stock from 1988-1991. New evidence suggests that foreign tax credit limitations encourage US multinationals to decrease their domestic debt by replacing this with both common and preferred stock financing. The results also indicate that larger multinationals are more likely to use preferred stock as an alternative funding option while smaller firms are more likely to select common stock. Further, the results overcome confounding variables linked with total measures of capital account changes.

Multinational Corporations, Debt & Capital Management, International business enterprises, Securities, Financial management, Foreign tax credit, Debt financing (Corporations), Debt financing

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Accounting for changing prices: the value relevance of historical cost, price level, and replacement cost accounting in Mexico

Article Abstract:

The value relevance of historical cost, price level and replacement cost accounting using a sample of Mexican firms from 1989 to 1995 is investigated. The change in the general price level and the change in the value of specific non-monetary assets are the two distinct aspects of changing prices.

Mexico, Cost Accounting, Analysis, Cost benefit analysis

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