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The economic determinants of depreciation accounting in late nineteenth-century Britain

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  • Shirley Carlon
  • Richard Morris

Abstract

This paper examines the economic incentives for unregulated companies, in late nineteenth-century Britain, to disclose in their published accounts the fact that they had charged depreciation. We argue that the disclosure will be positively associated with whether a company has outside shareholders and long-term debtholders, profitability, extent of depreciable assets, appointment of a professional auditor, and size. These hypotheses are tested using 150 British companies from the years 1880/81, 1889/90 and 1899/01. Our results indicate that whether depreciation was charged is related to profitability and, to a lesser extent, to the presence of outside shareholders, long-term debt holders and the appointment of a professional auditor. However, the amount of depreciation charged is related only to profitability and appears to be opportunistically determined.

Suggested Citation

  • Shirley Carlon & Richard Morris, 2003. "The economic determinants of depreciation accounting in late nineteenth-century Britain," Accounting History Review, Taylor & Francis Journals, vol. 13(3), pages 275-303.
    • Handle: RePEc:taf:acbsfi:v:13:y:2003:i:3:p:275-303
    DOI: 10.1080/09585200310001606590
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    References listed on IDEAS

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    3. Ball, R & Foster, G, 1982. "Corporate Financial-Reporting - A Methodological Review Of Empirical-Research," Journal of Accounting Research, Wiley Blackwell, vol. 20, pages 161-234.
    4. Myers, Stewart C., 1977. "Determinants of corporate borrowing," Journal of Financial Economics, Elsevier, vol. 5(2), pages 147-175, November.
    5. Ball, R & Foster, G, 1982. "Corporate Financial-Reporting - A Methodological Review Of Empirical-Research - Reply," Journal of Accounting Research, Wiley Blackwell, vol. 20, pages 245-248.
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    Cited by:

    1. Malcolm Anderson, 2004. "Accounting history publications 2003," Accounting History Review, Taylor & Francis Journals, vol. 14(2), pages 209-215.
    2. Brian D. Varian, 2024. "Market integration and a lower-productivity economy: the case of Australian federation and Queensland’s manufacturing sector, 1897–1906," CEH Discussion Papers 06, Centre for Economic History, Research School of Economics, Australian National University.

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