CHOICE OF PROPERTY, PLANT & EQUIPMENT DEPRECIATION RATE AND ITS EFFECT ON CAPITAL INVESTMENT DECISIONS
DOI:
https://doi.org/10.4270/ruc.2023110Keywords:
depreciation rate, investment decision, fixed assetsAbstract
The study aims to verify the association between the depreciation rate of fixed assets and capital investment in fixed assets. The sample comprised public companies on the Novo Mercado (B3) between 2010 and 2014. The statistical techniques used were robust regression and quantile regression with longitudinal data. The findings show that, on average, companies that adopt higher depreciation rates are associated with higher investment levels. The results complement previous research that analyzed this association with the depreciation method. The results practically contribute by showing that the choice of the depreciation rate, used in financial reports, regardless of the reason/incentive the manager has for choosing it (accounting purposes, earnings management, tax policy), is associated with the investment level. The main implication of the findings is to show that an accounting choice (depreciation rates) used for reporting purposes based on accounting regulations is associated with managerial decisions.
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