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HOW DO SMALL FIRMS MAKE INVENTORY ACCOUNTING CHOICES?
Author(s) -
Kuo HorngChing
Publication year - 1993
Publication title -
journal of business finance and accounting
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.282
H-Index - 77
eISSN - 1468-5957
pISSN - 0306-686X
DOI - 10.1111/j.1468-5957.1993.tb00262.x
Subject(s) - fifo and lifo accounting , business , accounting , inventory valuation , perspective (graphical) , financial accounting , accounting information system , accounting method , actuarial science , economics , artificial intelligence , fifo (computing and electronics) , computer science , computer hardware
In the past, the attention of studies on inventory method choices has invariably been focused on large firms' motivations to use LIFO. Small firms' inventory accounting decisions are different from those of large firms due to the fact that there are differences in financial reporting considerations. This study examines small firms' inventory accounting choices from the perspective of three major factors (firm size, risk, and managerial ownership). It was found that firm size, financial risk, and the interaction effect between financial risk and business risk are significantly correlated with the LIFO choice for small firms.