An exploration of managers' reasons for depreciation method choice in Egyptian companies

Colin Dey, John Grinyer, Donald Sinclair, Hanaa El-Habashy

    Research output: Contribution to journalArticle

    1 Citation (Scopus)

    Abstract

    Purpose This paper aims to complement a more conventional positive accounting theory (PAT)-based study of accounting method choice in Egyptian firms by examining three alternative computational reasons for depreciation method choice: simplicity; compatibility with industry norm; and suitability for class of asset. 

    Design-methodology-approach The paper draws on a questionnaire survey, sent to Egyptian companies, in which managers were asked to indicate their reasons for choosing depreciation methods as well as the actual depreciation methods used. 

    Findings The paper finds that technical reasons were frequently given in survey responses from managers. However, the available evidence on the actual depreciation methods used by their firms and industries is in fact more consistent with PAT-based theories of accounting choice than with such alternatives. This suggests that the responses to the survey reflected managers' rationalisations of decisions made for self-interested purposes. 

    Originality-value Most recent work on managerial decisions concerning accounting choices utilises data gathered from databases of published financial information and is undertaken within a PAT context. This study extends that approach by utilising the results of a questionnaire distributed in Egypt to test some additional hypotheses that reflect possible technical accounting reasons for justifying depreciation methods.

    Original languageEnglish
    Pages (from-to)20-32
    Number of pages13
    JournalJournal of Applied Accounting Research
    Volume10
    Issue number1
    DOIs
    Publication statusPublished - 29 May 2009

    Fingerprint

    Managers
    Depreciation
    Positive accounting theory
    Industry
    Accounting choice
    Simplicity
    Questionnaire
    Compatibility
    Financial information
    Rationalization
    Egypt
    Managerial decisions
    Data base
    Design methodology
    Assets
    Questionnaire survey

    Keywords

    • Directors
    • Dividends
    • United Kingdom

    Cite this

    Dey, Colin ; Grinyer, John ; Sinclair, Donald ; El-Habashy, Hanaa. / An exploration of managers' reasons for depreciation method choice in Egyptian companies. In: Journal of Applied Accounting Research. 2009 ; Vol. 10, No. 1. pp. 20-32.
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    An exploration of managers' reasons for depreciation method choice in Egyptian companies. / Dey, Colin; Grinyer, John; Sinclair, Donald; El-Habashy, Hanaa.

    In: Journal of Applied Accounting Research, Vol. 10, No. 1, 29.05.2009, p. 20-32.

    Research output: Contribution to journalArticle

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