Dynamic Analysis of Inventory Accounting Choice.

The article focuses on an analysis of the dynamic model of inventory accounting choice. It states that the change in inventory methods correlates with estimations identified of the dynamic model. It comments that an underlying continuous variable can be determined by an econometric threshold model. It states that last-in, first-out (LIFO) adopters revealed more variable rates for inventory growth than first-in, first out (FIFO) users for both postadoption and preadoption periods. It examines a dynamic model of accounting change which assumed changes of accounting states follow first-order Markov processes.