John Kostolansky Ethan Polnaszek

Abstract

Recent calls to repeal the use of LIFO raise questions about the number of firms that will be impacted, the extent of that impact, as well as the demographics of the impacted firms. The present study assesses the population of publicly-traded companies to determine the frequency of usage of LIFO, the dollar impact of using LIFO, and the connection between firm size and the use of LIFO. This study finds that the tax impact of repealing LIFO may be more manageable than has been reported in the financial press. In addition, this study documents the connection between absolute and relative firm size and the use of LIFO.