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March 18, 2026The Accounting Review

The Effect of the Firm's Capital Structure on the Choice of Accounting Methods.

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Authors

DDDan S. Dhaliwal

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Overview

This analysis finds management's accounting preferences affected by a firm's capital structure, indicating implications for financial reporting.

Key Points

  • This paper explores how a firm's financial leverage influences its choice of accounting methods.
  • Compared financial leverage of oil and gas firms using full cost vs. successful efforts accounting methods.
  • Analyzed preferences for accounting standards based on reported earnings volatility.
  • Examined potential impacts on technical defaults due to accounting choices.
  • Highly leveraged firms tend to prefer the full cost method over the successful efforts method.
  • Evidence supports the idea that accounting choices relate to a firm's capital structure.
  • Firms aiming to avoid technical default select accounting methods that minimize earnings volatility.

Cite This Study

Dan S. Dhaliwal (1980) studied this question.

synapsesocial.com/papers/69ba426d4e9516ffd37a2a8ahttps://doi.org/10.2308/tar-4511399
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Also Consider

Synapse has enriched 5 closely related papers on similar clinical questions. Consider them for comparative context:

  1. 1An Analysis of Differences Between Non-major Oil Firms Using Successful Efforts and Full Cost Methods.1979
  2. 2The Role of Debt Covenants in Assessing the Economic Consequences of Limiting Capitalization of Exploration Costs.1989
  3. 3The Impact of Accounting Regulation on the Stock Market: The Case of Oil and Gas Companies.1979
  4. 4An Examination of the Association Between Accounting and Share Price Data in the Extractive Petroleum Industry: A Comment and Extension.1978
  5. 5An Examination of the Association Between Accounting and Share Price Data in the Extractive Petroleum Industry.1975