Depreciation Policies in Regulated Companies: Which Policies are the Most Efficient?

Joshua Ronen and Bin Srinidhi
Additional contact information
Joshua Ronen: Schools of Business, New York University, New York, New York 10003
Bin Srinidhi: Schools of Business, New York University, New York, New York 10003

Management Science, 1989, vol. 35, issue 5, 515-526

Abstract: Decisions of firms such as whether to purchase new equipment frequently rather than better maintain and purchase less frequently are influenced by the (accounting) depreciation policies they use if they are rate-regulated. It is shown that basing decisions on depreciation policies, while uneconomic without regulation, might become rational under regulation. Regulators can mandate depreciation policies for these firms. This paper identifies a class of depreciation rules which will eliminate management incentives to make uneconomic capital replacement and maintenance decisions under regulation.

Keywords: accounting policy; regulation; depreciation (search for similar items in EconPapers)
Date: 1989
References: Add references at CitEc
Citations:

Downloads: (external link)
http://dx.doi.org/10.1287/mnsc.35.5.515 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:35:y:1989:i:5:p:515-526

Access Statistics for this article

More articles in Management Science from INFORMS Contact information at EDIRC.
Bibliographic data for series maintained by Chris Asher ().