Premium
Fixed Asset Revaluations and Managerial Incentives
Author(s) -
BROWN PHILIP,
IZAN H.Y.,
LOH ALFRED L.
Publication year - 1992
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.1467-6281.1992.tb00268.x
Subject(s) - incentive , asset (computer security) , fixed asset , economics , cash flow , cash , carry (investment) , monetary economics , business , microeconomics , finance , computer security , production (economics) , computer science
The study attempts to explain why Australian companies revalue their fixed assets, when a revaluation, by itself , has no discernible direct effect on cash flows and is costly to carry out. A revaluation is hypothesised to affect contracting and political costs. It may also help resolve problems associated with information asymmetries, or be used to signal information to investors. The results support the proposition that economic forces help explain the decision to revalue assets.