IDEAS home Printed from https://ideas.repec.org/a/inm/ormnsc/v35y1989i5p515-526.html
   My bibliography  Save this article

Depreciation Policies in Regulated Companies: Which Policies are the Most Efficient?

Author

Listed:
  • Joshua Ronen

    (Schools of Business, New York University, New York, New York 10003)

  • Bin Srinidhi

    (Schools of Business, New York University, New York, New York 10003)

Abstract

Decisions of firms such as whether to purchase new equipment frequently rather than better maintain and purchase less frequently are influenced by the (accounting) depreciation policies they use if they are rate-regulated. It is shown that basing decisions on depreciation policies, while uneconomic without regulation, might become rational under regulation. Regulators can mandate depreciation policies for these firms. This paper identifies a class of depreciation rules which will eliminate management incentives to make uneconomic capital replacement and maintenance decisions under regulation.

Suggested Citation

  • Joshua Ronen & Bin Srinidhi, 1989. "Depreciation Policies in Regulated Companies: Which Policies are the Most Efficient?," Management Science, INFORMS, vol. 35(5), pages 515-526, May.
    • Handle: RePEc:inm:ormnsc:v:35:y:1989:i:5:p:515-526
    DOI: 10.1287/mnsc.35.5.515
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1287/mnsc.35.5.515
    Download Restriction: no
    File URL: https://libkey.io/10.1287/mnsc.35.5.515?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:inm:ormnsc:v:35:y:1989:i:5:p:515-526. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Asher (email available below). General contact details of provider: https://edirc.repec.org/data/inforea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.