MOTIVES FOR PROPERTY, PLANT, AND EQUIPMENT REVALUATION: AN EMPIRICAL ANALYSIS OF LISTED MANUFACTURING FIRMS

Abstract

In this study, listed manufacturing companies in Borsa İstanbul are examined for the 2017-2021 period to reveal their motives for revaluing Property Plant and Equipment. Financial Leverage (LEV), Return on Assets (ROA), Return on Equity (ROE), Market Value/Book Value (M/B), and Earnings Per Share (EPS) ratios are compared based on borrowing capacity, political costs, and information asymmetry theories. Results reveal that there is no difference between the pre and post revaluation periods. However, revaluing and non-revaluing companies exhibit statistically significant differences in ROA, ROE, and EPS. It may indicate that revaluing companies use revaluation to improve their equity and total assets.

Keywords

• Revaluation
• Property Plant and Equipment
• Political Costs
• Information Asymmetry
• Financial Leverage.

MADDİ DURAN VARLIK DEĞERLEMESİNİN ALTINDAKİ TEMEL MOTİVASYONUN TESPİTİ: HALKA AÇIK İMALAT SEKTÖRÜ İŞLETMELERİ ÜZERİNDE BİR ARAŞTIRMA

Abstract

Bu çalışmada işletmeleri Maddi Duran Varlıklarını yeniden değerleme yapmaya motive eden nedenleri ortaya koymak için pay senetleri Borsa İstanbul’da kote olan imalat sektörü işletmelerinin 2017-2021 dönemi incelenmiştir. Yeniden değerlemeyi etkileyen faktörler, borçlanma hipotezi, politik maliyetler ve bilgi asimetrisi yaklaşımları çerçevesinde incelenmiş ve finansal kaldıraç (LEV), aktif kârlılığı (ROA), özkaynak kârlılığı (ROE), piyasa değeri/defter değeri (PD/DD) ve hisse başına kâr (HBK) oranları karşılaştırmalı olarak analiz edilmiştir. Araştırma sonucunda, değerleme yapan firmaların değerleme öncesi ve sonrası oranlarında farklılık bulunmamıştır. Değerleme yapan ve yapmayanların karşılaştırmasında ROA, ROE ve HBK oranlarında anlamlı farklılık görülmüş, değerleme yapanların net varlıklarını arttırmak amacıyla değerleme yaptıkları sonucuna ulaşılmıştır.

Keywords

• Yeniden Değerleme
• Maddi Duran Varlıkların Değerlemesi
• Politik Maliyetler
• Bilgi Asimetrisi
• Finansal Kaldıraç

References

1. Aboody, D., Barth, M. E., & Kasznik, R. (1999). Revaluations of fixed assets and future firm performance: Evidence from the UK. Journal of Accounting and Economics, 26(1-3), 149-178. https://doi.org/10.1016/S0165-4101(98)00040-8
2. Azouzi, M. A., & Jarboui, A. (2011). The evidence of management motivation to revalue property plant and equipment in Tunisia. Journal of Accounting and Taxation, 4(2), 19-28. https://doi.org/10.5897/JAT11.017
3. Barth, M. E., & Clinch, G. (1998). Revalued financial, tangible and ıntangible assets: associations with share prices and non-market-based value estimates. Journal of Accounting Research, 36, 199-233. https://doi.org/10.2307/2491314
4. Begley, J. (1990). Debt covenants and accounting choice. Journal of Accounting and Economics, 12, 125-139. https://doi.org/10.1016/0165-4101(90)90044-5
5. Brown, P., Izan, H. Y., & Loh, A. L. (1992). Fixed asset revaluations and managerial incentives. Abacus, 28, 36-57. https://doi.org/10.1111/j.1467-6281.1992.tb00268
6. Chadda, N. K., & Vardia, S. (2020). Fair value accounting and valuation of non-financial assets: A study of impact of IFRS adoption. Journal of Commerce and Accounting Research, 9(4), 63. http://publishingindia.com/downloads/6129.pdf
7. Chisnall, P . (2001). Fair value accounting–an industry view . Balance Sheet, 9(1), 27-33. https://doi.org/10.1108/09657960110695259
8. Choi, T. H., Pae, J., Park, S., & Song, Y. (2013). Asset revaluations: Motives and choice of items to revalue. Asia-Pacific Journal of Accounting & Economics, 20(2), 144-171. https://doi.org/10.1080/16081625.2012.719858

9. Cotter, J. (1999). Asset revaluations and debt contracting. Abacus, 35(3), 268-285. https://doi.org/10.1111/1467-6281.00046
10. Cotter, J., & Zimmer, I. (1995). Asset revaluations and assessment of borrowing capacity. Abacus, 31(2), 136-151. https://doi.org/10.1111/j.1467-6281.1995.tb00359.x
11. Easton, P. D., Eddey, P. H., & Harris, T. S. (1993). An investigation of revaluations of tangible long- lived assets. Journal of Accounting Research, 31, 1-38. https://doi.org/10.2307/2491161
12. Emerson, D. J., Karim, K. E., & Rutledge, R. W. (2010). Fair value accounting: A historical review of the most controversial accounting issue in decades. Journal of Business & Economics Research (JBER), 8(4). https://doi.org/10.19030/Jber.V8i4.705
13. Griffiths, I. (1990). Creative Accounting. London: Unwin Paperbacks.
14. Iatridis, E., & Kilirgiotis, G. (2012), Incentives for fixed asset revaluations: The UK evidence. Journal of Applied Accounting Research, 13(1), 5-20. https://doi.org/10.1108/09675421211231871 International Accounting Standard Board (IASB). (2003). Accounting for property, plant and equipment. International Accounting Standard 16.
15. Jaggi, B., & Tsui, J. (2001). Management motivation and market assessment: Revaluations of fixed assets. Journal of International Financial Management & Accounting, 12(2), 160-187. https://doi.org/10.1111/1467-646X.00070
16. Jaunzeme, J. (2019). Holistic approach to fair value estimation. In 17th International Scientific Conference Engineering For Rural Development, Jelgava: LLU, 1786-1794. https://www.cabdirect.org/cabdirect/abstract/20193417279
17. Jones, J. C. (1988). Financial instruments: Historical cost v. fair value. The CPA Journal, 58(8), 56. Missonier-Piera, F. (2007). Motives for fixed-asset revaluation: An empirical analysis with Swiss data. The International Journal of Accounting, 42(2), 186-205. https://doi.org/10.1016/j.intacc.2007.04.006
18. Missonier‐Piera, F. (2004). Economic determinants of multiple accounting method choices in a Swiss context. Journal of International Financial Management & Accounting, 15(2), 118-144. https://doi.org/10.1111/j.1467-646X.2004.00104.x
19. Quagli, A., & Avallone, F. (2010). Fair value or cost model? Drivers of choice for IAS 40 in the real estate industry. European Accounting Review, 19(3), 461-493. https://doi.org/10.1080/09638180.2010.496547
20. Rahman, M., & Hossain, S. Z. (2020). Does fixed asset revaluation create avenues for financial numbers game? Evidence from a developing country. Journal of Asian Finance, Economics and Business (JAFEB), 7, 293-304. https://doi.org/10.13106/jafeb.2020.vol7.no9.293
21. Seng, D., & Su, J. (2009). Managerial incentives behind fixed asset revaluations: evidence from New Zealand firms. Accountancy Working Paper Series. http://hdl.handle.net/10523/1606
22. Watts R. & Zimmerman J. (1978). Towards a Positive Theory of The Determination of Accounting Standards. The Accounting Review, 53, 112-134. https://www.jstor.org/stable/245729
23. Ulusan, H. (2014). Borsa İstanbul Pay Piyasası’na kayıtlı şirketlerde yönetimin uzun vadeli finansal olmayan varlıkları gerçeğe uygun değeri ile raporlama kararının belirleyicileri üzerine ampirik bir araştırma. İşletme Araştırmaları Dergisi, 6(1), 124-150.
24. Ulusan, H. & Doğan, İ. (2008). Muhasebe politikası seçimi: Pozitif muhasebe teorisi ve ekonomik belirleyiçiler-ampirik bir çalışma. Hacettepe Üniversitesi İktisadi ve İdari Bilimler Fakültesi Dergisi, 26(1), 229-254.