Effects of Macro-economic Factors on Property, Plant, and Equipment Revaluation Decisions: Evidence from Korean Companies

This study examines the relationship between property, plant, and equipment (PP&E) revaluation decisions and macroeconomic factors. We used a panel probit model based on 2008-2017 firm-level data for listed nonfinancial companies in Korea. The results show that the possibility of implementing PP&E revaluation for a firm can vary with the macroeconomic factors even if the firm-level financial factors are controlled. A lower real GDP growth rate increased the tendency for PP&E revaluations, while higher fixed asset prices and interest rates related more and less PP&E revaluations, respectively. This study reveals anticipated company behavior in connection with PP&E revaluations under changing macroeconomic indicators.