Evaluating models of the relationship between accounting profitability measures and internal rate of return

Steven R. Fritsche, Michael Timothy Dugan

Research output: Contribution to journalArticle

1 Citation (Scopus)

Abstract

Researchers have investigated the relationship between the internal rate of return (IRR) and accounting-based profitability measures using analytical and indirect empirical methodologies. The current study employs computer simulation to complement the other two methodologies and corroborate their results. The results indicate that the accounting rate of return (ARR) and the conditional estimate of internal rate of return (CIRR) are strongly associated with IRR; however, the length of the estimation period and formulation used for CIRR appear to affect its relationship to IRR. ARR's relationship to IRR appears to be unaffected by the length of the estimation period.

Original languageEnglish (US)
Pages (from-to)17-30
Number of pages14
JournalJournal of Applied Business Research
Volume25
Issue number2
StatePublished - Mar 1 2009
Externally publishedYes

Fingerprint

Profitability
Internal rate of return
Methodology
Rate of return
Computer simulation

ASJC Scopus subject areas

  • Business and International Management

Cite this

Evaluating models of the relationship between accounting profitability measures and internal rate of return. / Fritsche, Steven R.; Dugan, Michael Timothy.

In: Journal of Applied Business Research, Vol. 25, No. 2, 01.03.2009, p. 17-30.

Research output: Contribution to journalArticle

@article{be4fe627c40948c5824c03c63a5e0a97,
title = "Evaluating models of the relationship between accounting profitability measures and internal rate of return",
abstract = "Researchers have investigated the relationship between the internal rate of return (IRR) and accounting-based profitability measures using analytical and indirect empirical methodologies. The current study employs computer simulation to complement the other two methodologies and corroborate their results. The results indicate that the accounting rate of return (ARR) and the conditional estimate of internal rate of return (CIRR) are strongly associated with IRR; however, the length of the estimation period and formulation used for CIRR appear to affect its relationship to IRR. ARR's relationship to IRR appears to be unaffected by the length of the estimation period.",
author = "Fritsche, {Steven R.} and Dugan, {Michael Timothy}",
year = "2009",
month = "3",
day = "1",
language = "English (US)",
volume = "25",
pages = "17--30",
journal = "Journal of Applied Business Research",
issn = "0892-7626",
publisher = "CIBER Institute",
number = "2",

}

TY - JOUR

T1 - Evaluating models of the relationship between accounting profitability measures and internal rate of return

AU - Fritsche, Steven R.

AU - Dugan, Michael Timothy

PY - 2009/3/1

Y1 - 2009/3/1

N2 - Researchers have investigated the relationship between the internal rate of return (IRR) and accounting-based profitability measures using analytical and indirect empirical methodologies. The current study employs computer simulation to complement the other two methodologies and corroborate their results. The results indicate that the accounting rate of return (ARR) and the conditional estimate of internal rate of return (CIRR) are strongly associated with IRR; however, the length of the estimation period and formulation used for CIRR appear to affect its relationship to IRR. ARR's relationship to IRR appears to be unaffected by the length of the estimation period.

AB - Researchers have investigated the relationship between the internal rate of return (IRR) and accounting-based profitability measures using analytical and indirect empirical methodologies. The current study employs computer simulation to complement the other two methodologies and corroborate their results. The results indicate that the accounting rate of return (ARR) and the conditional estimate of internal rate of return (CIRR) are strongly associated with IRR; however, the length of the estimation period and formulation used for CIRR appear to affect its relationship to IRR. ARR's relationship to IRR appears to be unaffected by the length of the estimation period.

UR - http://www.scopus.com/inward/record.url?scp=61849176893&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=61849176893&partnerID=8YFLogxK

M3 - Article

AN - SCOPUS:61849176893

VL - 25

SP - 17

EP - 30

JO - Journal of Applied Business Research

JF - Journal of Applied Business Research

SN - 0892-7626

IS - 2

ER -