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Purpose The purpose of this study is to investigate whether audit quality is associated with the speed with which managers revise earnings forecasts to arrive at the actual earnings through the lens of the auditor selection theory. This study examines this relationship in a unique institutional setting, Japan, where nearly all managers disclose earnings forecasts. Design/methodology/approach The authors pioneer an empirical proxy to capture the speed of management forecast revisions based on well-established principles from the finance and disclosure literatures. This proxy is tested alongside other disclosure proxies (namely, accuracy, frequency and timeliness) to assess the influence of audit quality on managerial forecasting behavior. Findings This empirical analysis shows that forecast revision speed is higher for firms that select higher-quality auditors. While firms that select higher-quality auditors revise forecasts in a more timely fashion, these firms revise less frequently. Moreover, the authors find that the influence of audit quality on forecast revisions is asymmetric. Specifically, the analysis of downward forecast revisions shows that higher-quality auditors are associated with firms that disclose bad news via forecasts revisions faster, more frequently and in a more timely fashion. However, the analysis of upward forecast revisions shows that higher-quality auditors have no effect on the speed with which firms disclose good news via forecast revisions, even though they are associated with less frequent but more timely forecast revisions. These findings have important implications for prior studies that consistently document an asymmetric response of the stock market to good news and bad news. Originality/value The authors provide evidence on the relationship between audit quality and management earnings forecasts using a novel and intuitive measure that captures forecast revision speed. This measure speaks to the growing interest in understanding the notion of speed and timing of voluntary disclosures. This study provides a more robust and comprehensive measure of the speed with which managers revise their earnings forecasts to arrive at the actual earnings. Furthermore, this study is among the first to document an asymmetric effect of audit quality on the type of news disclosed in forecast revisions.

Purpose This paper aims to examine the financial statement impact resulting from the tax depreciation on buildings that was reinstated on 25 March 2020 as part of the New Zealand Government’s coronavirus (COVID-19) tax support package. The COVID-19 pandemic and the tax relief created an accounting response to map the environment to accounting reports, reversing previously recognized deferred tax liabilities and increasing reported income as a result. Design/methodology/approach This is an exploratory and descriptive study to understand the accounting response and impact on companies’ financial statements following a COVID-19 tax relief to support businesses in a dire financial situation as the effects of COVID-19 took hold. Findings First, the accounting response provided the appropriate mapping from the COVID-19 environment to accounting reports. Second, the financial statement impacts are material, especially for companies with extensive holdings of buildings that are held for use. Third, while the accounting relief was immediate, the economic (cash flow) support does not occur until a year later. Research limitations/implications The financial statement impacts are based on a subset of NZX 50 companies with the available information at the time of writing. However, they do not compromise the external validity of the findings because the tax depreciation relief applies to other listed companies, unlisted public and private companies, trust, partnerships and individuals. Practical implications The New Zealand Government could have been more helpful to businesses by allowing an immediate depreciation deduction in the 2020 year as opposed to implementing it from 2021. Further, it could have legislated a backlog depreciation deduction from 2010 – when the depreciation on buildings was disallowed – to 2020. Originality/value This paper documents the evolution of the accounting for deferred taxes when the New Zealand Government withdrew the tax depreciation in 2010, how NZ IAS 12 evolved as a result of that event and now the reversal effect with the reinstatement of the tax depreciation during COVID-19. The paper also blends in the accounting responses and considers whether they are opportunistic or efficient.

Purpose This paper aims to examine the economic rationale for the COVID-19 wage subsidy and grants related to assets and the accounting for these wealth transfers under NZ IAS 20 Accounting for Government Grants and Disclosure of Government Assistance. The principal contribution is presenting an economics–accounting nexus for government assistance to firms during a pandemic and for the nation’s economic development. Design/methodology/approach This is a descriptive study that draws on the economic theory of regulation to understand the rationale for wealth transfers, then examining the accounting for the wealth transfers by analyzing the financial statements of NZX 50 companies that received the wage subsidy and SkyCity and Chorus that received substantial grants to develop and operate the New Zealand International Convention Centre and building a large part of New Zealand’s Ultra-Fast Broadband fiber optic network, respectively. Findings First, the 10 NZX 50 companies that received the government’s wage subsidy were justified to receive it from the legal, ethical and moral perspectives. However, some non-NZX 50 companies, while legally entitled to the wage subsidy, took advantage of the wealth transfer when they were profitable and paid dividends. This latter group of companies was not seen as behaving ethically and morally. Second, the government granted millions of dollars to SkyCity and Chorus for building critical infrastructures that are economically beneficial for the nation and that are unlikely to attract private investment, and these companies accounted for the grants related to assets in accordance with NZ IAS 20. Research limitations/implications The financial statement impacts of the wage subsidy are based on a subset of NZX 50 companies with available information at the time of writing. However, they do not compromise the external validity of the findings because the wage subsidy applies to all businesses. Similarly, the manner in which SkyCity and Chorus accounted for the grants related to assets would apply equally to any entity that is a recipient of such a grant. Originality/value This paper presents an economic understanding for the existence of government grants and how the accounting mirrors the economic rationale for the “grants related to income” and “grants related to assets.” This paper demonstrates the importance of the economics–accounting nexus.

Background Patients with diabetes and acute coronary syndrome (ACS) are at high risk for subsequent heart failure. Apabetalone is a selective inhibitor of bromodomain and extra-terminal (BET) proteins, epigenetic regulators of gene expression. Preclinical data suggest that apabetalone exerts favorable effects on pathways related to myocardial structure and function and therefore could impact subsequent heart failure events. The effect of apabetalone on heart failure events after an ACS is not currently known. Methods The phase 3 BETonMACE trial was a double-blind, randomized comparison of apabetalone versus placebo on the incidence of major adverse cardiovascular events (MACE) in 2425 patients with a recent ACS and diabetes. This prespecified secondary analysis investigated the impact of apabetalone on hospitalization for congestive heart failure, not previously studied. Results Patients (age 62 years, 74.4% males, 90% high-intensity statin use, LDL-C 70.3 mg/dL, HDL-C 33.3 mg/dL and HbA1c 7.3%) were followed for an average 26 months. Apabetalone treated patients experienced the nominal finding of a lower rate of first hospitalization for heart failure (2.4% vs. 4.0%, HR 0.59 [95%CI 0.38–0.94], P = 0.03), total number of hospitalizations for heart failure (35 vs. 70, HR 0.47 [95%CI 0.27–0.83], P = 0.01) and the combination of cardiovascular death or hospitalization for heart failure (5.7% vs. 7.8%, HR 0.72 [95%CI 0.53–0.98], P = 0.04). Conclusion Apabetalone treatment was associated with fewer hospitalizations for heart failure in patients with type 2 diabetes and recent ACS. Future studies are warranted to define the potential for BET inhibition with apabetalone to prevent heart failure in patients with diabetes and ACS.

Introduction: Obesity increases the risk of type 2 diabetes (DM2) and cardiovascular disease (CVD), due to associated insulin resistance, dyslipidemia, high blood pressure and chronic inflammation. Bromodomain and extraterminal (BET) proteins such as BRD4 enhance the expression of proinflammatory genes by recruiting transcription factors to promoters and enhancers. Inhibition of BET binding to chromatin leads to anti-inflammatory and anti-atherogenic effects in models of DM2 and CVD. Hypothesis: BET inhibition with apabetalone, a clinical-stage small molecule, reduces vascular inflammation in a mouse model of diet-induced obesity. Methods: From 8 to 30 weeks of age, C57 BL/6J mice were fed a high-fat (HFD) or low-fat diet (LFD). Mice received apabetalone at 150 mg/kg b.i.d between 14 and 30 weeks. Gene expression was analyzed post necropsy in the aorta by PCR, nCounter® Inflammation Panel and Ingenuity® Pathway Analysis. Human aortic endothelial cells (HAECs) treated with TNFα and apabetalone were analyzed by BRD4 ChIP-seq and RNA-seq to assess BRD4 chromatin occupancy and transcriptional changes. Results: Profiling of 254 genes in the aorta showed an upregulation of 27 inflammatory genes in HFD-fed mice as compared to LFD (pRela (22%), Hif1a (25%) and Tcf4 (44%), involved in inflammation, hypoxia and cell growth, respectively. Other upregulated genes mapped to cytokine, cytoskeleton, coagulation and complement pathways. Apabetalone reduced aortic mRNA expression of transcription factors Rela (12%), Nfkb1 (22%) and Tcf4 (15%), chemokines Ccl2 (47%), Ccl7 (49%) and Ccl8 (69%), leukocyte receptors Ccr2 (64%) and Itgam (29%) and endothelial receptors Sele (64%) and Icam1 (36%). Bioinformatics predicted enhanced signaling by TNFα in the HFD vs. LFD aorta, which was countered by apabetalone. In HAECs, apabetalone lowered gene expression and BRD4 binding to Rela , Hif1a and Tcf4 genes and prevented TNFα-mediated BRD4 accumulation in proximity of Ccl2 , Sele and Icam1 genes. Conclusions: HFD induces vascular inflammation in mice. Apabetalone treatment diminishes this proinflammatory phenotype, providing mechanistic insight into how BET inhibitors may reduce CVD risk in DM2 patients.

This study examines the performance of State-owned enterprises by conducting a contemporary examination in the New Zealand environment. Applying both a cross-sectional and time-series approach, we document significant and consistent evidence that state ownership is negatively associated with firm profitability compared to private ownership. We also find evidence suggesting that state ownership is positively associated with asset turnover and labour intensity, but not associated with labour turnover. This implies that SOEs on average experience a higher asset turnover due to excessive labour employment, compared to private firms.

Purpose The purpose of this study is to examine firm-specific characteristics that influence firms’ choice of assurance provider in sustainability assurance. The market for sustainability assurance consists of three types: accounting firms (particularly the Big 4 firms), non-accounting specialist consulting firms (that specialise only in sustainability issues) and non-accounting general consulting firms (that provide general advisory/consulting services). Design/methodology/approach Using a sample selected from the top 100 publicly listed companies in the UK and USA that published a sustainability report in 2010 and 2011, respectively, for which assurance was obtained, a multinomial logistic regression model is applied by regressing the three types of assurance providers on firm size, leverage, profit, liquidity, percentage of strategic shareholding and two control variables – country and year. Findings The results indicate that the choice of sustainability assurance provider is related to firm size, profitability, liquidity and country. Research limitations/implications There may be relevant variables omitted from the empirical analysis; results of this study may not be able to be generalized beyond the sample selected; and the sample size is relatively small. Practical implications Sustainability assurance is a viable assurance service that the accounting profession can provide. Originality/value This study helps in identifying the types of firms that are likely to demand assurance services provided by accounting firms.

SYNOPSIS This paper explores firms' decisions to own or lease buildings, the economics underlying those decisions, and the accounting ramifications. We provide a theoretical argument and empirical evidence to suggest that firms that require highly specific buildings in their operations are more likely to own, rather than to lease, their buildings, and that this decision is primarily a function of efficiency concerns rather than opportunistic motives. Our findings raise the question of whether certain types of leases (i.e., property or real estate leases in particular) warrant the added complexity and costly compliance from standards overhaul.

This paper aims to determine potential spaces for sustainable future development at Hutan Simpan Ampang, Ulu Klang, Malaysia. The site is highly valuable due to strategic location and high availability of spaces. However, due to several landslide incidents happened in Ulu Klang over the past decades, the site is categorised as a landslide-prone area. Therefore, Potential Surface Analysis (PSA) is conducted to determine the potential areas within the site that are safe and suitable for future development. All the factors were processed in Geographic Information System (GIS) through the overlay mapping technique, combining spatial and attribute data to obtain the suitability map. The result found that the majority coverage of the site is not suitable for any future development. There are only a few coverage areas that are suitable for small scale development. However, a combination of the very high suitability area and the high suitability area expanded the opportunity for sustainable future development.

Problem, research strategy, and findings: College campuses are multimodal settings with very high levels of walking and biking in conjunction with high levels of vehicular traffic, which increases risks for bicyclists and pedestrians. In this study, we examine crash data (both police reported and self-reported) and urban form data from three U.S. campuses to understand the spatial and temporal distribution of crashes on the campuses and their immediate periphery. To account for underreporting of pedestrian and bicycle crashes, we developed and circulated an online survey, which helped identify collision hotspots across the three campuses. We then studied these locations to determine their characteristics, generate a typology of campus danger zones, and recommend design and policy changes that could improve pedestrian and cycling safety. We find a significant underreporting of crashes, and unequal spatial and temporal distributions of campus crashes. We identify three particular types of danger zones for p...

This study investigates the value relevance of the deferred tax liability recognized using comprehensive versus partial allocation. Our research examines New Zealand firms who, prior to the introduction of International Financial Reporting Standards, were free to choose between comprehensive and partial allocation. We test the joint hypothesis that the partial, as opposed to comprehensive, deferred tax liability is relevant for equity valuation and is sufficiently reliable to be reflected in investors’ valuation assessments. Our results are consistent with this prediction.

PurposeThe purpose of this paper is to provide editorial insight into recent developments in financial accounting issues in the Pacific Rim area. The paper aims to focus on the impact of international financial reporting standards (IFRS) and provide a commentary, as well as context, for the papers that appear in this special issue.Design/methodology/approachThe paper reviews and comments on several relevant academic papers and regulatory releases.FindingsThis paper outlines several key developments in the Pacific Rim region since the decision by Australia and New Zealand to adopt IFRS. The proposed adoption of IFRS in other countries is examined, and noted are the successes and tensions that one set of global accounting standards creates. The contributions of four papers are outlined in this special issue to this debate, and provide suggestions for future research.Practical implicationsThis review should be of relevance to academics, the profession, and regulators, by providing academic insights into the current debate about the costs and benefits of IFRS.Originality/valueThis paper offers a contemporary analysis of the success and challenges of IFRS adoption in the Pacific Rim area.

This study investigates whether New Zealand firms’ voluntary disclosure of operating income, which is also known as earnings before interest and tax, in the income statement is related to the investment opportunity set. New Zealand provides an ideal setting to examine this because New Zealand generally accepted accounting principles do not require the disclosure of operating income as an intermediate income number in arriving at net income (earnings) in the income statement. We hypothesize and find evidence that firms with high assets-in-place and high leverage are more likely to voluntarily disclose operating income/earnings before interest and tax. However, the assets-in-place finding is sensitive to alternative measures of the investment opportunity set.

We examine whether auditor independence is affected by the amount spent on non-audit services. Faster growth in non-audit fees and longer time periods over which non-audit services are purchased might reduce the auditor’s independence from that client. Our results do not provide any support for a relationship between non-audit fee growth rates or the length of time of the non-audit fee relationship with the client and discretionary accruals, our measure of earnings management. We do find some evidence that the interaction of the non-audit fee time-period measures and client importance is positive and significantly related to discretionary accruals.

Using confidential data from US manufacturing firms' tax returns and Inland Revenue Service (IRS) audit adjustments, Mills (1998) tests, and finds support for, her hypothesis that IRS audit adjustments increase as the book-tax differences increase. We test Mills' hypothesis using confidential data obtained from the New Zealand Inland Revenue (hereafter Inland Revenue). Confidential data provide the key variable of interest, Inland Revenue's proposed audit adjustment, which is not available from public sources. These data provide the exact audit adjustment amounts, eliminating measurement errors inherent in proxy variables, and enable a temporal alignment of the book-tax differences with the Inland Revenue audit adjustments, thereby enhancing the internal validity of the relation between book-tax differences and Inland Revenue audit adjustments. Because the results of our study using New Zealand data, another time period, a more diverse set of firms, and a different institutional environment are consistent with those of Mills, we argue for the generalizability of Mills' hypothesis that proposed audit adjustments are positively related to the excess of book income over taxable income.

We evaluate and summarize the large body of audit fee research and use meta-analysis to test the combined effect of the most commonly used independent variables. The perspective provided by the meta-analysis allows us to reconsider the anomalies, mixed results, and gaps in audit fee research. We find that, although many independent variables have consistent results, several show no clear pattern to the results and others only show significant results in certain periods or particular countries. These variables include a loss by the client and leverage, which have become significant in comparatively recent studies; internal auditing and governance, both of which have mixed results; auditor specialization, regarding which there is still some uncertainty; and the audit opinion, which was a significant variable before 1990 but not in more recent studies.

This study examines the relationship between board composition and firm value, and the extent to which this relationship may be affected by a company’s investment opportunity set. There is little research that examines this issue, particularly for the New Zealand market. Of the research that exists, and generally for the research that examines how board composition affects firm performance, the findings have been mixed. Using a randomly chosen sample, which improves the external validity of results from prior studies, we find that board composition of high growth option firms is positively related to firm value, and this relationship is maintained when more refined measures that proxy the characteristics of outside directors (such as tenure of outside directors, the level of outside director equity ownership, the number of other board positions held by outside directors, and the total proportion of non‐executive directors, including grey directors) are recognised.

Intangible assets comprise goodwill and identifiable intangible assets with finite and indefinite lives. Current New Zealand GAAP amortizes intangible assets on a systematic basis over their useful lives, with the proviso that the amortization period for goodwill cannot exceed 20 years. International Financial Reporting Standards (IFRS) do not permit the periodic amortization of goodwill and identifiable intangible assets with indefinite lives. Instead, these intangibles are subject to a periodic impairment test with any impairment recognised in profit or loss. In the absence of an impairment loss, the IFRS rule would increase earnings before interest and tax (EBIT) and earnings (E), but this impact should not affect the value of the enterprise (EV) and the value of the firm’s equity (P). Hence, valuation heuristics for EV/EBIT (enterprise value to EBIT) and PE (price to earnings) multiples, which are commonly used for valuations and which have evolved under the amortization rule, need to be revised downward to adjust for the IFRS‐induced increase in EBIT and E. Our analysis of New Zealand companies with intangible assets indicates that the mean EV/EBIT and PE multiples with amortization of intangibles of 12.403 and 13.586, respectively, decrease to 10.971 and 12.346, respectively, without amortization of intangibles.

This paper examines the role of accounting in an efficient contracting perspective of the firm. The firm is an alternative to the market when the costs of using the market become excessive. When a firm replaces the market, authority substitutes for the price mechanism in determining how decisions are made. This paper examines accounting's role in controlling the firm to ensure resources are put to their highest-value use. Accounting, together with employment contracts, compensation arrangements, debt contracts, internal and external auditors, and the board of directors including its audit and compensation committees comprise a package of mechanisms that have evolved to govern the firm. These institutional devices become the firm's efficient contracting technology. As accounting is part of that contracting technology, the accounting controls and systems that evolve and get implemented are efficient and the accounting methods that are used in calculating the numbers that form part of the firm's contractual arrangements are, likewise, efficient.

Objective. To explore the attitudes of pharmacy, pharmacy technician, medical, and public health students before and after an IPE activity that focused on smoking cessation in the Middle East. Methods. A pre-post intervention research design using the Readiness for Interprofessional Learning Scale (RIPLS) was used for this study. The tool contained 20 items, categorized under the following subscales: teamwork and collaboration, professional identity, and patient-centeredness. Results. A total of 47 out of 50 students from four different health disciplines in Qatar (medicine, pharmacy, pharmacy technician, and public health) who participated in the activity completed a pre- and post-intervention pre-validated questionnaire (94% response rate). Total attitude scores were calculated for all the 20 items along with attitudinal scores of the three domains. Most of the students reported having a positive attitude toward IPE; the number of students having a positive attitude toward IPE increased after the IPE session. The overall median (IQR) score increased from 82 (16) before the session to 84 (15) after the session. Students from different disciplines did not vary in their attitude scores. Conclusion. Health care professional students in Qatar perceived IPE positively, believing that it enhanced their communication skills, collaboration and appreciation of professional roles. This study has implication on developing effective methods to implement IPE in various health professional education curricula.

This paper examines how managers in New Zealand allocate the cost of firms' investments in subsidiaries between net tangible assets and acquired goodwill. We find a negative relation between acquired goodwill and leverage. This could be interpreted as the result of managers of highly leveraged acquiring firms opportunistically allocating a lower portion of the acquisition price to acquired goodwill. However, this analysis, like much of the research on accounting choice, suffers from an omitted variables problem. We present evidence that the observed negative relation between acquired goodwill and leverage may stem from each variable's relation to the investment opportunity set. Further, we find no evidence that acquired goodwill is related to the existence of debt covenants. Together, these results suggest an endogenous relation between the firm's asset structure, its financing policy, and the allocation of acquisition price to acquired goodwill.

This paper examines the impact of asset specificity on firms’ decisions to own or lease their buildings. We present evidence that these decisions are primarily a function of efficiency concerns rather than opportunistic motives. We predict that firms requiring highly specific buildings in their operations are more likely to own, rather than to lease, their buildings, and we provide empirical evidence that supports our prediction, after controlling for potential opportunism. Our findings provide rare large-sample evidence consistent with a theoretical link between asset specificity and asset ownership as argued in the literature on economic organization.

This paper is intended to report to the industry from the IADC Advanced Rig Technology Committee's Future Technology subcommittee a survey of the industry regarding industry needs for technological development and how they are valued. The paper will include survey results, as well as discuss ongoing committee work. The group has produced three sets of deliverables to date. First, they have studied a wide range of technologies that have been introduced to the industry, some well-accepted and rapidly adopted, while others have never grown beyond niche technologies, at best. The paper will highlight learnings and assumptions when the group reviewed common factors that may or may not have contributed to their success. Second, the team developed a future technology needs survey which was distributed to a wide range of individuals representing all segments of the business, including service firms and suppliers, drilling contractors, and operators, with a specific emphasis on the operating community. The results of that survey will be reported and the findings analyzed and discussed to help develop a landscape of perceived future technology needs. The third deliverable comes from working with the SPE Drilling Systems Automation Technical Section (DSATS) to create a matrix of drilling operations versus drilling issues, such that the direction of automation and optimization can be more clearly defined. This paper provides data and analysis along with conclusions which highlight methods and working groups in the industry. It shares some of the valuable results with recommendations for the future investments for the industry to consider in the future development of technology. It will highlight typical restricting practices as well as best in class technology introduction paths.

The novel compound RVX-208 is a small molecule that upregulates the gene expression of apoA-I and raises HDL-C in non-human primates. Here, we examined the effects of oral administration of RVX-208 on serum apoA-I and HDL-C levels , HDL size distribution, and HDL function. African green monkeys received RVX-208 (7.5, 15 and 30 mg/kg; twice daily and 60 mg/kg; once daily) or vehicle control for 28, 42, and 63 days. We report that RVX-208 chronic treatment resulted in a highly significant increase in the average of serum apoA-I and HDL-C levels (57% and 92%, respectively). Interestingly, RVX-208 treatment modified the distribution of HDL particle size causing a significant increase in preβ1-LpA-I and larger α1-LpA-I species. The ability of serum to promote cholesterol efflux via ABCA1, ABCG1 or SR-BI-dependent pathways in a cell culture model was significantly increased by RVX-208. The phase Ia safety and pharmacokinetic human study comprised of a total of 80 subjects. In the multiple ascending dose arm, 24 participants were randomly assigned to 3 cohorts of 8 healthy volunteers (6 active and 2 placebo), and received oral administration of RVX-208 at 2, 3 and 8 mg/kg per day or placebo for 7 days. The compound was well tolerated and had good oral absorption meeting the objectives of safety and pharmacokinetics. ApoA-I, HDL-C, HDL size distribution and ABCA1-dependent cholesterol efflux were assessed at days 1 (predose) and 7. The percent change from baseline to day 7 for apoA-I was 11% higher (P = 0.03) in the RVX-208 treated participants compared to placebo. Interestingly, preβ1-LpA-I change was 30% (P = 0.02) higher in the actively treated group and was found to strongly correlate with increased apoA-I levels (R2 = 0.72). Furthermore, ABCA1-dependent cholesterol efflux change was 10% higher (P = 0.03) and was found to correlate with increased preβ1-LpA-I . Taken together, these pharmacodynamic data from human healthy volunteers show consistent trends in apoA-I production and HDL functionality, supporting the findings in the African green monkey. Further investigation of the effect of RVX-208 on the HDL metabolic pathway is ongoing in humans and animals to establish the mechanisms of action and therapeutic potential in treating atherosclerotic cardiovascular disease.

This study examines why firms in New Zealand change income tax accounting methods from comprehensive to partial tax allocation. New Zealand provides a unique institutional setting to test this phenomenon because it allows companies to use either comprehensive or partial tax allocation, a situation not permitted in other major accounting jurisdictions such as the U.S., Canada, and Australia. I hypothesize the change from the comprehensive to the partial tax allocation method is made for efficient contracting reasons to maximize firm value. Specifically, I argue that if firms experience growth in investments in depreciable assets and continue to use comprehensive tax allocation, an unintended and potentially ever growing liability that has no cash outflow implications is reported on the balance sheet. Overstatement of this liability could result in inadvertent adverse consequences such as perceived increased risk, leading to higher borrowing costs and debt covenant violation. As a result, these firms change to partial tax allocation, because it is seen as a more efficient accounting procedure in these circumstances. In general, I find support for the efficient contracting argument - that is, the change to partial is related to the extent of investment in depreciable assets. However, debt-related opportunistic incentives cannot be ruled out totally.