Date of Award


Document Type


Degree Name

Doctor of Philosophy (PhD)

First Advisor

Donald R. Deis, Jr


This study investigates the determinants of accounting choices for subsidiary firms in multi-firm organizations. A "subsidiary" is defined as either a company that is controlled (i.e., more than 50 percent ownership) by another corporation (its "parent") or is a firm under the parent company's influence (i.e., between 20 and 50 percent ownership). Previous studies focus exclusively on the parent company; hence little is known about making accounting procedure choices for subsidiaries. As a separate legal entity, a subsidiary's accounting policies should be of interest to its creditors, regulators, and noncontrolling minority-interest shareholders. The accounting procedure choices investigated are depreciation and inventory. The sample was comprised of 96 subsidiary-parent matches for depreciation methods and 36 subsidiary-parent matches for inventory methods drawn from the period ranging from 1982 to 1997. Two sets of empirical models were evaluated. First, single firm models that ignore the nature of the parent-subsidiary relationship but, rather, focus solely on the characteristics of the subsidiary firm. Second, multi-firm models were evaluated that expand the single firm model by including variables that capture certain aspects of the parent-subsidiary relationship. Statistically significant results were found for some of the following variables that measure the multi-firm aspect of the subsidiary's accounting choice: (1) the parent company's choice, (2) the percentage ownership held by the parent, and (3) when the subsidiary was acquired from another parent company. In addition, this study contributes by identifying the level of proportional ownership that signals, on average, the exercise of parental influence over the subsidiary's choice.