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The impairment-only approach to goodwill has regularly been criticized for offering too much discretion to managers and facilitating the manipulation of goodwill impairment losses. Extant research provides mixed results on whether managers exploit their inherent discretion informatively or opportunistically. The purpose of this paper is to examine the determinants of discretionary goodwill impairment losses in Europe.

The authors divide goodwill impairment losses into economically induced and discretionary parts. Thereafter, the authors examine the determinants of discretionary goodwill impairments.

The results indicate that discretionary goodwill impairment losses are used opportunistically rather than informatively. The authors find that managers exploit their discretion to “clear the deck” and to meet or beat analysts’ forecasts. However, the opportunistic behavior is constrained by corporate governance and enforcement mechanisms.

The findings contribute to the current discussion on the suitability of the impairment-only approach by introducing inferences on how areas of discretion inherent in goodwill impairment testing are associated with management incentives and governance mechanisms in a European setting.

The results offer enforcers and standard-setters important insights into how mangers exploit discretion in goodwill accounting. These insights can help to identify firms that are likely to infringe upon the applicable accounting standards.

In contrast to prior research, the authors analyze the association among management incentives, governance mechanisms and discretionary goodwill impairment losses rather than the association with total or expected goodwill impairment losses. Moreover, to the best of authors’ knowledge, there is little empirical evidence based on a European (IAS 36) setting.

This study examines the reporting of impairment losses in family and non-family private firms. The socioemotional wealth (SEW) theory suggests that the reporting practices in family firms may differ from non-family firms and may vary among family firms.

The research question is examined using a large-scale archival study. The authors use unique register data on family relationships for Norwegian private firms provided by the CCGR database at BI Norwegian Business School.

Drawing on the socioemotional wealth theory, the authors predict and find that private family firms are more reluctant to report impairment losses compared to private non-family firms. The results also suggest that both the likelihood to report impairment losses and the impairment amounts increase with board independence in private family firms. The authors also find some evidence suggesting that private family firms with a family CEO report lower impairment losses than private family firms without a family CEO, but this result is less robust and should be interpreted with caution.

The true economic impairment is unobservable. The authors use proxies based on prior research to control for whether impairment losses are faithfully reported or not.

The results suggest a higher risk of impairment losses being managed in private family firms than in private non-family firms and that independent board members mitigate this tendency somewhat in private family firms. Awareness of this risk should have practical value for stakeholders such as non-family owners and creditors, external auditors, supervisory and monitoring bodies, and regulators.

This study contributes to the accounting literature by examining the reporting of a specific accrual (impairment losses) in the setting of private family firms. Prior research in this area is scarce.

This study aims to contribute to the debate on goodwill accounting by examining the information content of impairment losses recognized in half-yearly reports. Half-yearly reports provide a suitable context to examine the effectiveness of the impairment process. Due to IFRIC 10 requirements, indeed, managers may have incentives to avoid recognizing impairment losses at the interim reporting date.

The study adopts an archival approach. Based on the traditional Ohlson’s model (1995), it explores the information content of half-yearly impairment losses in the European context over the period 2007–2017.

Findings confirm the relevance of half-yearly reports and suggest that half-yearly impairment losses are significantly associated with stock prices. In particular, investors positively value companies that recognized goodwill impairment losses at the interim reporting date.

The study contributes to the academic debate on goodwill and the effectiveness of the impairment procedure. In particular, it provides empirical evidence on the recognition of goodwill write-offs when it is possible to avoid the impairment test in the absence of indications of impairment.

Findings of this study can support the current debate on accounting for goodwill also in the light of the recent proposals of the IASB on the need to improve the effectiveness of the impairment test.

This study provides original empirical evidence on the goodwill impairment test in half-yearly reports, extending previous research that typically examines this issue in annual reports.

This paper aims to examine the impact of the mandatory adoption of (International Financial Reporting Standards [IFRS] 9) on loan provisions, nonperforming loans (NPL) and impairment loan loss in Gulf banks. This study also investigates potential variations in outcomes compared to prior models and explores the use of the Callaway and Sant’Anna (2021) estimator for difference-in-differences (DiD) with multiple time periods.

The research is based on a sample of 53 Gulf banks covering the period from 2012 to 2020. The study analyzes the changes in loan provisions, impairment loss and NPL following the implementation of IFRS 9. It uses statistical analysis and the DiD method to compare the outcomes between the experimental group (treated by IFRS 9) and the control group (not treated).

The findings reveal a statistically insignificant increase in loan provisions, impairment loss and NPL after the adoption of IFRS 9. These results align with previous studies and suggest that Gulf banks were proactive in anticipating and mitigating the impact of the new standard. The study also observes a synchronization of provisioning practices across Gulf countries and a certain level of consistency in recognizing loan losses.

The practical implications of this study suggest that Gulf banks have successfully absorbed the impact of IFRS 9 and have implemented collaborative approaches.

The study offers some new sight into IFRS9 outcomes in developing countries and opens the door for implementing a novel DiD estimation in future research studies.

This paper aims to provide evidence that will inform the convergence debate regarding accounting standards. The authors assess the ability of impairment reversals allowed under International Accounting Standard 36 but disallowed by the Financial Accounting Standards Board to provide useful information about a company.

The authors use a sample of 182 Malaysian firms that reversed impairment charges and a matched sample of firms which chose not to reverse their impairments. Further analysis examines if reversing an impairment charge is associated with motivations for and evidence of earnings management.

The authors find no evidence that the reversal of an impairment charge marks a company out as managing contemporaneous earnings. However, they document evidence that firms with high levels of abnormal accruals and weak corporate governance avoid earnings decline by reversing previously recognized impairments. In addition, companies that have engaged in big baths as evidenced by high accumulated impairment balances and prior changes in top management, use impairment reversals to avoid earnings declines.

The results of this study support both the informative and opportunistic hypotheses of impairment reversal reporting using Financial Reporting Standard 136.

The results also demonstrate how companies that use impairment reversals opportunistically can be identified.

The results support IASB’s approach to the reversal of impairments. They also provide novel evidence as to how companies exploit a cookie-jar reserve created by a prior big bath opportunistically.

This study investigates the implementation challenges and economic consequences of the International Financial Reporting Standards 9 (IFRS 9) Financial Instruments.

Descriptive evidence on equity asset reclassifications and estimated impairment using the new expected credit loss (ECL) model are presented. Multivariate analyses on the disposal of available-for-sale (AFS) and fund investment post-announcement and the value relevance of impairments to financial assets post-implementation are performed.

Over 60% of sample firms report inconsistent equity asset reclassifications and do not change estimated impairment using the new expected credit loss model. Firms also switch from AFS to equity fund investments post-announcement. Lastly, impairments to financial assets increase in value relevance to investors’ post-implementation, but only in financial institutions and firms with Big 4 auditors.

This study's findings suggest that IFRS 9 presents implementation challenges and changes equity investment strategies. They also indicate cross-sectional differences in firms' ability to effectively apply the new standards. This study is valuable for policymakers, business leaders, investors and academics.

The purpose of this study is to examine the impact of asymmetric information, estimated as the geographic distance between the acquiring firm and the target firm, on goodwill impairment following a merger or acquisition.

This study uses regression analysis to investigate the research questions of this study.

This study finds that geographic distance is positively related to the magnitude of current and cumulative goodwill impairment. The results of this study still hold even after robustness checks for other factors that affect mergers and acquisitions and sources of asymmetric information.

This study extends and links two distinct research streams: asymmetric information related to geographic distance studies in finance and goodwill literature in accounting. Specifically, this study extends literature on the impact of geographic distance on various firm characteristics and contributes to research regarding the determinants of goodwill impairment, a major research stream in goodwill accounting (Li and Sloan, 2016). To the best of the authors’ knowledge, this is the first study that performs a direct empirical test on the relation between geographic distance (between the acquiring firm and the target firm) and goodwill impairment.

The purpose of this study was to assess lifetime economic costs for people with four developmental disabilities (DDs): mental retardation, cerebral palsy, hearing loss, and vision impairment. Estimates were generated for direct medical costs, direct non-medical costs, and productivity losses resulting from increased morbidity and premature mortality. Findings suggest that lifetime costs, in excess of costs for individuals without DDs, are approximately $870,000 per person for mental retardation and $800,000 per person for cerebral palsy (in 2000 dollars). Analogous cost estimates for hearing loss and vision impairment are approximately $330,000 and $470,000, respectively. Roughly four-fifths of total costs reflect productivity losses.

The purpose of this paper is to examine the methods used to perform impairment test for intangible assets from a business combination and the information provided by the consolidated financial statements of a Group of Italian banks in the period 2009-2014. The purpose is to verify if, as assumed in literature, there is a positive link between profitability and the tendency of manager’s to post the impairment losses of intangible assets promptly and accurately.

The existence of a link between profitability and the quality of disclosure was verified by constructing correlation indices, and then ascertaining not only the reliability but also the strength and direction of the statistical connection between the above two aspects. A multivariate linear regression reconfirmed the results obtained by the previous bivariate analysis.

The results confirm the basic assumption, showing that the link between the aspects considered is statistically significant and positive in all the years in question.

This study fills a gap, given that no papers were found in literature specifically pertaining to banks and other financial institutions. Moreover, the decision to focus the study on Italian banks seems to be particularly appropriate for a number of different reasons: before the financial crisis, Italian banks made numerous acquisitions, posting high amounts for intangible assets; the financial crisis made the stock market prices plummet, thus making it necessary to write-off intangible assets from business combinations; and even before the ESMA, the Bank of Italy intervened on several occasions on the question of reporting, urging Italian banks to comply with disclosure requirements and impairment criteria.

The “public interest” of financial institutions was used as an argument to intervene in accounting practices. The Bank of Spain's standard was not compatible with International Accounting Standard (henceforth IAS) 39 and the Spanish banking sector had become one of the most provisioned in Europe. This makes it an interesting case study of the relationship between provisioning and income smoothing. The 2008 financial crisis revealed that provisions were insufficient and a reinforcement regulation process began in 2012. This paper aims to examine whether, since 2012, the Bank of Spain's regulatory effort on impairment accounting standards has induced less income smoothing, correcting its countercyclical effect.

A regression model is applied during the period 2005–2020, to test whether there is a trend change in the correlation between the level of provisions and annual earnings in 2012.

The results show that from 2012 onwards (when the Bank of Spain reinforced the regulation on provisioning), there was a correction in income smoothing behaviour.

This study provides empirical evidence that reinforces the claim that accounting policy can affect decision-making accounting practices, in this particular case, at the Bank of Spain.