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Alternative Hypotheses Concerning Depreciation of Buildings
Author(s) -
CLINCH GREG
Publication year - 1983
Publication title -
abacus
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.632
H-Index - 45
eISSN - 1467-6281
pISSN - 0001-3072
DOI - 10.1111/j.1467-6281.1983.tb00245.x
Subject(s) - depreciation (economics) , cash flow , audit , business , cash , actuarial science , finance , economics , accounting , microeconomics , profit (economics) , financial capital , capital formation
Ball, Walker and Whittred (1979) reported that companies receiving audit qualifications for non‐compliance with the requirement to depreciate buildings earned higher than expected returns at the time of the release of the qualification. This paper examines the possibility that this result could be due to cash‐flow effects related to the decision not to comply with the depreciation requirement. The results generally support the view that there are cash‐flow effects associated with a company's decision not to depreciate buildings.