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dc.contributor.authorCaylor, Marcus L.
dc.contributor.authorWhisenant, Scott
dc.descriptionThis work is licensed under a Creative Commons Attribution 4.0 International License.en_US
dc.description.abstractIn this study we test the argument that information asymmetry and the problems of adverse selection provide incentives for managers to use accounting choices to signal relatively higher future prospects. Specifically, we contend that firms use accelerated depreciation to credibly signal higher future earnings and cash flows, consistent with signaling theory. Compared to straight-line depreciation, accelerated depreciation reduces earnings in the earlier years of asset lives and produces more variability in earnings. Despite these drawbacks, hundreds of firms voluntarily use accelerated depreciation for at least some of their depreciable assets. Our results indicate that the use of accelerated depreciation foreshadows higher future earnings and cash flows for horizons of one, two, and three years ahead.en_US
dc.publisherMacrothink Instituteen_US
dc.rightsCopyright © Macrothink Institute.en_US
dc.subjectFinancial reportingen_US
dc.subjectDepreciation choiceen_US
dc.subjectOperating performanceen_US
dc.titleDepreciation Choice and Future Operating Performanceen_US
kusw.kuauthorWhisenant, Scott
kusw.oaversionScholarly/refereed, publisher versionen_US
kusw.oapolicyThis item meets KU Open Access policy criteria.en_US

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Copyright © Macrothink Institute.
Except where otherwise noted, this item's license is described as: Copyright © Macrothink Institute.