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March 18, 2026The Accounting Review

Investment Decisions and the Equity Accounting Standard.

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Authors

ECEugene E. ComiskeyGeorgia Institute of TechnologyCMCharles W. MulfordGeorgia Institute of Technology

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Implication

Demonstrates how the ownership percentage criterion affects investment decisions, suggesting economic implications for accounting standards.

Key Points

  • This research aims to investigate the influence of the 20 percent ownership criterion on firm investment decisions.
  • Analyzed investment positions of firms relative to the 20 percent ownership criterion.
  • Compared characteristics of investees below 20 percent (carried at cost) with those above (carried at equity).
  • Examined dimensions of profitability and earnings covariability between the two groups.
  • A notable concentration of firm investments at or near the 20 percent ownership threshold was found.
  • Investors with holdings just below 20 percent exhibited different profitability characteristics compared to those just above.
  • Suggests that the ownership criterion meaningfully affects firm investment behavior.

Cite This Study

Comiskey et al. (1986) studied this question.

synapsesocial.com/papers/69ba43f74e9516ffd37a5b99https://doi.org/10.2308/tar-4491702
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Also Consider

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

  1. 1Market Value Information for Non-subsidiary Investments.1971
  2. 2THE RESIDUAL EQUITY POINT OF VIEW IN ACCOUNTING.1959 · 1 citations
  3. 3OBSERVATIONS ON 'THE EQUITY METHOD' AND INTERCORPORATE RELATIONSHIPS.1933
  4. 4The Effect of the Firm's Capital Structure on the Choice of Accounting Methods.1980
  5. 5Alternative Methods of Accounting for Long-Term Nonsubsidiary Intercorporate Investments in Common Stock.1972