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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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    1. Robert H. Parker & Richard D. Morris, 2001. "The Influence of U.S. GAAP on the Harmony of Accounting Measurement Policies of Large Companies in the U.K. and Australia," Abacus, Accounting Foundation, University of Sydney, vol. 37(3), pages 297-328, October.
    2. 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.
    3. Holthausen, Robert W., 1990. "Accounting method choice : Opportunistic behavior, efficient contracting, and information perspectives," Journal of Accounting and Economics, Elsevier, vol. 12(1-3), pages 207-218, January.
    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.

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