What question did this study set out to answer?

This article aims to examine the effects of changing depreciation accounting methods on net income and market reactions in firms.

Stock Market Reaction to the Depreciation Switch-Back.

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This investigation reveals how switching depreciation methods affects net income in firms, suggesting market impacts.

This article aims to examine the effects of changing depreciation accounting methods on net income and market reactions in firms.
Analyzed data from 69 firms that switched from accelerated to straight-line depreciation.
Evaluated the financial statement impacts of these changes during a specific period.
Focused on 65 switch-back firms to assess market influences.
The change in depreciation method significantly increased reported net income.
The median increase in net income after taxes for profitable firms was 8.64%.
Net income increases varied from 1.00% to 26.8% among the firms examined.

T. Ross Archibald (1972) studied this question.

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