earticle

영어

The purpose of this study is to find such determinants as economic factors and management`s motivation which affect on the choice of accounting methods. Depereciation and inventory valuation methods are selected. The constant percentage of declining-balance and straight-line method are considered as income decreasing and income increasing depreciation method, respectivly. The average and first-in first-out inventory valuation methods are cinsidered to be the same as in the case of depreciation. Firm size, tax rate, and debt ratio are selected explanatory variables for accounting methods choice. After logit analysis is conducted to test research model, regression analysis is also conducted additionally. Test results show that all the hypotheses are rejected at the 10% level except the firm size when 2 strategy is dependent variable. The results are different from those of previous research. Therefore, this leads to conclustion that the economic consequence theory can not be applied to the Korean unlisted firms. This result may be due to the fact that the political costs of Korean unlisted firms is related to firms` site itself rather than reported income numbers, and firms tend to follow the tax rules to avoid the difficulties of tax adjustment. The other reason may be that the priority of choice among the depreciation and inventory valuation methods varies with firm because each firm posesses different level of tangible fixed assets and inventories. Thus, this provides basis for gneral belief that unlisted firms tend to choose accounting method conventionally rather than intentionally.