The Timing of Asset Purchases to Achieve Earnings Thresholds

2015 ◽  
Vol 28 (1) ◽  
pp. 81-106 ◽  
Author(s):  
Thomas G. Canace ◽  
Leigh Salzsieder
Keyword(s):  
Capital Investment ◽  
Capital Expenditure ◽  
Investment Decisions ◽  
Capital Intensity ◽  
Data Availability ◽  
Capital Expenditures ◽  
Cross Sectional ◽  
Quarterly Earnings ◽  
Asset Purchases ◽  
Earnings Thresholds

ABSTRACT This study examines whether managers use capital investment decisions, and the resulting depreciation expense, to achieve quarterly earnings thresholds. We also address whether these actions merely facilitate short-term earnings management or whether firms may trade off investment decisions to deliver earnings. We posit that managers may view capital expenditures as an alternative for earnings considerations because of the process for capital expenditure decision making and the accounting for these investments. Our findings suggest that managers use discretion over capital expenditures to achieve two well-documented earnings thresholds, but that these decisions largely reverse in the following quarter. We document the deferral of capital expenditures to avoid depreciation for industries where the median useful life averages approximately seven years. Cross-sectional tests also suggest that the use of capital expenditures for achieving thresholds varies depending upon the firm's capital intensity, remaining book value of assets, operating cash flow constraints, CEO horizon, and fiscal quarter. Data Availability: Data are available from the authors upon request.

The Utilization of Quantitative and Qualitative Information in Groups' Capital Investment Decisions

2014 ◽  
Vol 27 (1) ◽  
pp. 1-24 ◽  
Author(s):  
Nicole P. Ang ◽  
Ken T. Trotman
Keyword(s):  
Capital Investment ◽  
Investment Decision ◽  
Investment Decisions ◽  
Quantitative Information ◽  
Data Availability ◽  
Strategic Decisions ◽  
Qualitative Information ◽  
Accounting Systems ◽  
Unique Information ◽  
Present Information

ABSTRACT Organizations frequently use interactive groups to make strategic decisions, aiming to capitalize on individual members' unique knowledge. However, research shows that groups focus on information that members have in common, not unique information, resulting in suboptimal outcomes. Given that accounting systems can present information in various forms, we experimentally examine whether quantitative information results in greater information sharing and use than qualitative information. We take advantage of a rich dataset created by videoing groups making a capital investment decision. Consistent with prior research, we find that groups prefer common to unique information, regardless of whether it is quantitative or qualitative. However, individuals use quantitative information more than qualitative information before group interaction, and make more references to it during discussion. Added insights from the videos include identifying what determines greater use of quantitative cues, the importance of the numbers attached to cues, and how successful groups use quantitative cues. Data Availability: Please contact the authors.

High-Quality Information Technology and Capital Investment Decisions

2019 ◽  
Vol 34 (3) ◽  
pp. 1-29
Author(s):  
John L. Abernathy ◽  
Brooke Beyer ◽  
Jimmy F. Downes ◽  
Eric T. Rapley
Keyword(s):  
Information Technology ◽  
Capital Investment ◽  
Investment Decision ◽  
Investment Decisions ◽  
Data Availability ◽  
Decision Quality ◽  
Quality Information ◽  
Investment Efficiency ◽  
High Quality ◽  
High Quality Information

ABSTRACT We examine the effect of high-quality information technology (IT) on management's capital investment decisions. Evaluating capital investment decisions with contemporary investment efficiency and long-term measures of investment effectiveness, we document a positive relation between high-quality IT and capital investment decision quality. In particular, we find high-quality IT is associated with more optimal levels of investment as well as fewer future fixed asset write-downs. We also disaggregate investment efficiency and find the relation with IT quality holds for investment decisions related to capital expenditures and acquisitions, but not research and development expenditures. Overall, our results suggest managers equipped with better internal information from higher-quality IT are able to make superior capital investment decisions. Our study contributes to the literature by providing evidence of a significant determinant of capital investment decision quality and documenting a specific mechanism that mediates the indirect effect of IT quality on future performance. JEL Classifications: D83; E22; G31; M15; M41. Data Availability: We thank InformationWeek for providing annual rankings that were previously published. All other data are publicly available from regulatory filings; we obtained data from the Compustat, Execucomp, and I/B/E/S databases.

scholarly journals ANALISIS HUBUNGAN PENDAPATAN ASLI DAERAH, DANA ALOKASI UMUM, DAN DANA ALOKASI KHUSUS ATAS BELANJA MODAL PADA PEMERINTAH DAERAH KABUPATEN TOLITOLI PROVINSI SULAWESI TENGAH

2013 ◽  
Vol 2 (1) ◽  
pp. 1
Author(s):  
Fahri Eka Oktora ◽  
Winston Pontoh
Keyword(s):  
Local Governments ◽  
Capital Investment ◽  
Capital Expenditure ◽  
Field Research ◽  
Capital Expenditures ◽  
Fixed Assets ◽  
Close Relationship ◽  
Investment In Fixed Assets ◽  
The Relationship

Local governments need to increase capital investment in fixed assets, such as: equipments, buildings, infrastructures, and other fixed assets. Capital expenditure allocation was based on the local needs for facilities and infrastructure. The higher level of capital investment expected to improve the quality of public services, because the fixed assets due to capital expenditure is a key for the implementation of governmental duties and provides services to the public.This study was aimed at analyzing the corelations of local own revenues, general allocation funds, and specific allocation funds with capital expenditures at Tolitoli Regency in Central Sulawesi Province. Research design methods is the field research by correlation analysis.Test results showed a lack relationship between local own revenues with capital expenditures by R value was 0,155. Meanwhile the relationship between general allocation funds with capital expenditures was 0,981 and special allocation funds with capital expenditures was 0,427. It shows the close relationship between the two variables with capital expenditures.Keywords: Local Own Revenue, General Allocation Fund, Spesific Allocation Fund, Capital Expenditure.

Financial distress determinants among SMEs: empirical evidence from Sweden

2020 ◽  
Vol 47 (3) ◽  
pp. 547-560 ◽  
Author(s):  
Darush Yazdanfar ◽  
Peter Öhman
Keyword(s):  
Financial Crisis ◽  
Financial Distress ◽  
Large Scale ◽  
Global Financial Crisis ◽  
Binary Logistic Regression ◽  
Data Availability ◽  
Cross Sectional ◽  
Data Set ◽  
Content Type ◽  
The Global Financial Crisis

PurposeThe purpose of this study is to empirically investigate determinants of financial distress among small and medium-sized enterprises (SMEs) during the global financial crisis and post-crisis periods.Design/methodology/approachSeveral statistical methods, including multiple binary logistic regression, were used to analyse a longitudinal cross-sectional panel data set of 3,865 Swedish SMEs operating in five industries over the 2008–2015 period.FindingsThe results suggest that financial distress is influenced by macroeconomic conditions (i.e. the global financial crisis) and, in particular, by various firm-specific characteristics (i.e. performance, financial leverage and financial distress in previous year). However, firm size and industry affiliation have no significant relationship with financial distress.Research limitationsDue to data availability, this study is limited to a sample of Swedish SMEs in five industries covering eight years. Further research could examine the generalizability of these findings by investigating other firms operating in other industries and other countries.Originality/valueThis study is the first to examine determinants of financial distress among SMEs operating in Sweden using data from a large-scale longitudinal cross-sectional database.

scholarly journals Time-Varying Convergences of Environmental Footprint Levels between European Countries

Energies ◽  
2021 ◽  
Vol 14 (7) ◽  
pp. 1813
Author(s):  
Durmuş Çağrı Yıldırım ◽  
Seda Yıldırım ◽  
Seyfettin Erdoğan ◽  
Işıl Demirtaş ◽  
Gualter Couto ◽  
...  
Keyword(s):  
Ecological Footprint ◽  
Unit Root Test ◽  
Data Availability ◽  
European Countries ◽  
Time Varying ◽  
Cross Sectional ◽  
Ecological Footprints ◽  
Window Method ◽  
International Policies ◽  
Rolling Window

This study proposes the time-varying nonlinear panel unit root test to investigate the convergence of ecological foot prints between the EU and candidate countries. Sixteen European countries (such as Albania, Austria, Belgium, Denmark, France, Germany, Greece, Italy, Luxembourg, Netherlands, Poland, Portugal, Romania, Spain, Sweden and Turkey) and analysis periods are selected according to data availability. This study proposes a cross-sectional Panel KSS with Fourier to test the convergence of the ecological footprints. Then, we combine this methodology with the rolling window method to take into account the time-varying stationarity of series. This study evaluated sub-components of ecological footprints separately and provided more comprehensive findings for the ecological footprint. According to empirical findings, this study proves that convergence or divergence does not show continuity over time. On the other side, this study points out the presence of divergence draws attention when considering the properties of the sub-components in general. As a result, this study shows that international policies by EU countries are generally accepted as successful to reduce ecological footprint, but these are not sufficient as expected. In this point, it is suggested to keep national policies to support international policies in the long term.

Economic Comparison of Hand-Sutured and Coupler-Assisted Microvascular Anastomoses

2017 ◽  
Vol 34 (01) ◽  
pp. 071-076 ◽  
Author(s):  
Linden Head ◽  
Douglas McKay
Keyword(s):  
Economic Analysis ◽  
Operative Time ◽  
Capital Expenditure ◽  
Operating Time ◽  
Free Tissue Transfer ◽  
Capital Expenditures ◽  
Purchasing Decisions ◽  
Venous Anastomosis ◽  
Literature Reviews ◽  
Economic Comparison

Background Compared with hand-sewn anastomoses, microvascular anastomotic coupling devices (MACDs) provide equivalent flap survival and reduced operative time. To date, an economic analysis of MACDs has not been reported. The objective of this study was to evaluate the economics of a venous anastomosis performed using a coupling device compared with a hand-sewn anastomosis. Methods Economics were modeled for a single free tissue transfer (FTT) requiring one venous anastomosis performed with either hand-sewn sutures or with a coupler-assisted anastomosis using the GEM COUPLER. Fixed and variable costs incurred with each anastomotic technique were identified with an activity-based cost analysis. Price lists were retrieved from suppliers to quantify disposable costs and capital expenditures. Two literature reviews were executed to identify microsurgical operating room (OR) costs and operating time reductions with coupler-assisted anastomoses. Results For each venous anastomosis, the use of the anastomotic coupler increased disposable costs by $284.40 compared with a hand-sutured anastomosis. Total fixed and variable OR costs were $30.82 per minute. Operating time was reduced by a mean of 16.9 minutes with a coupler-assisted anastomosis, decreasing OR costs by $519.29. Total savings of $234.89 were generated for each coupler-assisted anastomosis, recuperating the device's capital expenditure after 13 uses. Conclusion Compared with a hand-sewn venous anastomosis, an MACD produces savings with each case and quickly recoups the device's capital expenditure. Despite its limitations and simplicity, this study provides a practical economic analysis that can help inform purchasing decisions, particularly for smaller volume centers where the economic rationale may be less clear.

scholarly journals The Effects of Securities Class Action Litigation on Corporate Liquidity and Investment Policy

2015 ◽  
Vol 50 (1-2) ◽  
pp. 251-275 ◽  
Author(s):  
Matteo Arena ◽  
Brandon Julio
Keyword(s):  
Investment Decisions ◽  
Market Value ◽  
Corporate Investment ◽  
Class Action ◽  
Investment Policy ◽  
Capital Expenditures ◽  
Litigation Risk ◽  
Securities Litigation ◽  
Corporate Liquidity ◽  
Temporal Effects

AbstractThe risk of securities class action litigation alters corporate savings and investment policy. Firms with greater exposure to securities litigation hold significantly more cash in anticipation of future settlements and other related costs. The result is due to firms accumulating cash in anticipation of lawsuits and not a consequence of plaintiffs targeting firms with high cash levels. The market value of cash is lower for firms exposed to litigation risk. Corporate investment decisions are also affected by litigation risk, as firms reduce capital expenditures in response. Our results are robust to endogeneity concerns and possible spurious temporal effects.

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