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Int. J. Financial Stud. 2016, 4(4), 19; doi:10.3390/ijfs4040019

The Effect of Straight-Line and Accelerated Depreciation Rules on Risky Investment Decisions—An Experimental Study

1
Chair in Business Taxation, Faculty of Economics and Management, University of Magdeburg, Postbox 4120, D-39016 Magdeburg, Germany
2
Behavioral Accounting/Taxation/Finance, Faculty of Management, Economics and Social Sciences, University of Cologne, Albertus-Magnus-Platz, D-50923 Köln, Germany
3
Institute of Company Taxation and Tax Theory, Faculty of Economics and Management, University of Hanover, Königsworther Platz 1, D-30167 Hanover, Germany
*
Author to whom correspondence should be addressed.
Academic Editor: Nicholas Apergis
Received: 27 April 2016 / Revised: 13 September 2016 / Accepted: 21 September 2016 / Published: 13 October 2016
(This article belongs to the Special Issue Behavioral Economics and Strategy)
View Full-Text   |   Download PDF [593 KB, uploaded 13 October 2016]   |  

Abstract

The aim of this study is to analyze how depreciation rules influence the decision behavior of investors. For this purpose, we conduct a laboratory experiment in which participants decide on the composition of an asset portfolio in different choice situations. Using an experimental setting with different payment periods, we show that accelerated compared to straight-line depreciation can increase the willingness to invest as hypothesized by theory. However, this expected behavior is only observed in a more complex environment (with a subsidy) and not in a less complex environment (without a subsidy). View Full-Text
Keywords: taxation; behavioral accounting; behavioral taxation; straight-line depreciation; accelerated depreciation; tax perception; risk-taking behavior; portfolio choice taxation; behavioral accounting; behavioral taxation; straight-line depreciation; accelerated depreciation; tax perception; risk-taking behavior; portfolio choice
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This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. (CC BY 4.0).

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MDPI and ACS Style

Ackermann, H.; Fochmann, M.; Wolf, N. The Effect of Straight-Line and Accelerated Depreciation Rules on Risky Investment Decisions—An Experimental Study. Int. J. Financial Stud. 2016, 4, 19.

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