Review of Accounting Studies

, Volume 13, Issue 2–3, pp 411–417 | Cite as

Discussion of “inventory policy, accruals quality and information risk”

  • Per Olsson


Krishnan et al. (Review of Accouting Studies, 2008) investigate how the choice of LIFO versus FIFO affects firms’ accruals quality and cost of capital. The authors show that LIFO firms have better accruals quality and lower cost of capital than FIFO firms and that the cost of capital effect associated with the inventory valuation method is not subsumed by differences either in fundamental risk or accruals quality between LIFO and FIFO firms. This discussion is focused on key design choices and underlying assumptions.


Inventory Accruals quality Information risk Cost of capital Asset pricing 

JEL Classifications

M41 G12 


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Copyright information

© Springer Science+Business Media, LLC 2008

Authors and Affiliations

  1. 1.The Fuqua School of BusinessDuke UniversityDurhamUSA

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