Do firms follow GAAP when they record share repurchases?
| Autor: | Monica Banyi, Dennis Caplan |
|---|---|
| Rok vydání: | 2016 |
| Předmět: |
040101 forestry
050208 finance Accounting method business.industry Retained earnings 05 social sciences Equity (finance) Accounting 04 agricultural and veterinary sciences Accounting standard Treasury Net asset value 0502 economics and business Accounting information system Treasury stock 0401 agriculture forestry and fisheries Business Finance |
| Zdroj: | Advances in Accounting. 34:41-54 |
| ISSN: | 0882-6110 |
| DOI: | 10.1016/j.adiac.2016.07.005 |
| Popis: | This paper examines U.S. firms' accounting for share repurchases and the accounting choice provided to Delaware-incorporated firms between the treasury and retirement methods. This accounting choice does not affect income, cash flows, or net assets, but it nevertheless affects financial reporting transparency and the allocation of equity between retained earnings and contributed capital. According to Generally Accepted Accounting Principles (GAAP), the accounting choice to record share repurchases should reflect management's intended disposition of the repurchased shares. We compare characteristics of Delaware-incorporated treasury and retirement firms and find that the choice between the two accounting methods is not always consistent with GAAP, but neither is it random; rather, this choice is related to a number of firm characteristics including firm growth, industry membership, trading exchange, and price–earnings ratio. We also find that a firm's accounting method for share repurchases is associated with a firm's propensity to make future share repurchases. |
| Databáze: | OpenAIRE |
| Externí odkaz: |
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