Stakeholders' Implicit Claims and Accounting Method Choice

36 Pages Posted: 15 May 1995 Last revised: 21 Jul 2018

See all articles by Robert M. Bowen

Robert M. Bowen

Chapman University - The George L. Argyros School of Business & Economics; University of Washington - Foster School of Business

Larry DuCharme

University of Washington

D. Shores

University of Washington - Department of Accounting

Date Written: December 1, 1995

Abstract

This study adds to the literature that attempts to explain firms' accounting method choices by expanding the traditional set of independent variables to include those derived from implicit claims between the firm and its customers suppliers employees and short-term creditors. On large samples of surviving firms over five non-adjacent years we find that implicit claims variables explain on average 13% (and never less than 10%) of the cross-sectional variation in combined scores for inventory and depreciation methods. We find that our implicit claims variables remain incrementally significant when we include independent variables found to have explanatory power in prior studies (i.e. leverage bonus compensation tax and regulatory/political exposure variables). Taken together implicit claims and traditional variables explain on average 19% of the variation in combined scores for inventory and depreciation methods (and never less than 16.6%).

JEL Classification: M41

Suggested Citation

Bowen, Robert M. and DuCharme, Larry and Shores, D., Stakeholders' Implicit Claims and Accounting Method Choice (December 1, 1995). Available at SSRN: https://ssrn.com/abstract=54424 or http://dx.doi.org/10.2139/ssrn.54424

Robert M. Bowen (Contact Author)

Chapman University - The George L. Argyros School of Business & Economics ( email )

333 N. Glassell
Orange, CA 92866
United States
206.334.0911 (Phone)

HOME PAGE: http://www.chapman.edu/our-faculty/robert-bowen

University of Washington - Foster School of Business ( email )

Box 353226
University of Washington
Seattle, WA 98195-3226
United States
206.334.0911 (Phone)

HOME PAGE: http://foster.uw.edu/faculty-research/directory/robert-bowen/

Larry DuCharme

University of Washington ( email )

Box 353200
School of Business Administration 231 Mackenzie Hall
Seattle, WA 98195-3200
United States

D. Shores

University of Washington - Department of Accounting ( email )

224 Mackenzie Hall, Box 353200
Seattle, WA 98195-3200
United States
206-543-5605 (Phone)
206-685-9392 (Fax)

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