Depreciation Policies in Regulated Companies: Which Policies are the Most Efficient?
研究受监管公司如何受折旧政策影响，发现某些折旧规则能消除管理层在监管下做出不经济的资本更换和维护决策的动机。
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.