This study examines the effect on capital expenditures of " bonus depreciation," which was intended to stimulate such spending by allowing businesses to immediately expense a portion of the cost of qualified capital expenditures from late 2001 through 2004. After controlling for many previously documented determinants of capital expenditures, some of our results indicate that capital expenditures during bonus depreciation's availability were greater than those during the time it was not available, consistent with the expected effect. However, other results indicate that bonus depreciation had an insignificant effect on capital expenditures. These mixed findings generally persist through several sensitivity analyses. We interpret these results as weakly supportive evidence that Congress attained its goal of stimulating capital spending.
|Number of pages||26|
|Journal||Journal of Accounting and Public Policy|
|State||Published - Nov 2010|
Bibliographical noteFunding Information:
We thank the editors, two anonymous reviewers, and the workshop participants at the University of North Carolina at Greensboro, East Carolina University, Saint Louis University, the University of Kentucky, and a National Tax Association annual conference, as well as Dennis Chambers and Chris Bollinger for their helpful comments and advice. We also thank John Graham for providing us with his simulated marginal tax rates. Hulse acknowledges support from the Von Allmen Research Support Endowment and the Deloitte Professorship Endowment.
ASJC Scopus subject areas
- Sociology and Political Science