Date of Award
Open Access Dissertation
Moore School of Business
This study examines how accounting reserves influence firms’ internal decisions. In particular, this study investigates whether and how reserves currently reported in a firm’s balance sheet affect managerial risk-taking in the making of capital investment decisions. The experimental results show that firm managers are more likely to take risks in the making of capital investment decisions when the amount of reserves is large compared with when it is small. Additionally, the amount of reserves influences managerial risk-taking through sequentially influencing managers’ perceived risks of missing relevant earnings targets and managers’ perceived risks of investing in risky capital investment options. These findings contribute to the accounting literature and they have implications for firm managers by providing evidence regarding the real economic consequences of exercising accounting discretion.
Lui, K.(2020). Serving as a Backup Plan: Accounting Reserves and Their Impact on Managerial Risk-Taking. (Doctoral dissertation). Retrieved from https://scholarcommons.sc.edu/etd/5887