International Journal of Accounting and Taxation

Accounting for Investment Property: Determinants of Accounting Policy Choice by Portuguese Listed Firms
Sandra Alves

Abstract
This study examines the determinants of accounting choices for investment property by Portuguese listed firms within the framework of Positive Accounting Theory. The results support the debt hypothesis under the Positive Accounting Theory, where high leverage firms significantly increase the probability the firms to choose the fair value model. The outcome also suggests that size and information asymmetry significantly increase the probability the firms to choose the fair value model, whereas ownership concentration significantly increase the probability the firms to choose the cost model. Overall this study suggests that the decision to use the fair value method seems to be guided mainly by the need to signal the firm’s financial health, especially its additional borrowing capacity, and to reduce information asymmetry between the company and outside investors. However, the equity/bonus plan and the number of non-executive directors on the board do not seem to matter.

Full Text: PDF     DOI: 10.15640/ijat.v7n2a1