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The market reaction to announced deep cuts in capital expenditures

Article Abstract:

The stock market response to significant reductions in the capital expenditures of US firms were studied. The reductions are part of the process of streamlining, wherein firms cut back on their operations which are considered inefficient. The stock market reaction to major capital spending cutannouncements were examined by studying articles in the Wall Street Journal from 1975 to 1987. The announcements were then compared to data from the Centerfor Research in Security Prices on stock market prices before and after the date of the announcement. It was concluded that the stock market responded positively to major cuts in capital expenditures.

Security and commodity exchanges, Analysis, Economic aspects, Finance, Stock-exchange, Stock exchanges, Capital investments, Corporations, Corporate finance

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Accounting methods and managerial discretion: the case of dollar-value LIFO

Article Abstract:

Dollar-value LIFO (last in first out) is the most popular LIFO inventory method. It allows economically unrelated items to be grouped into large classes. Despite its acceptance, cost-flow inconsistencies associated with the method can confuse auditors and mislead management. A careful consideration of inventory inputs is needed to ensure correct accounting information and aid management in evaluation.

Accounting and auditing, Inventory control, Inventories, Inventory accounting

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