Original scientific paper
https://doi.org/10.1080/1331677X.2016.1164923
The impairment test of goodwill: an empirical analysis of incentives for earnings management in Italian publicly traded companies
Bojana Korošec
Mateja Jerman
Polona Tominc
Abstract
Since the current International Accounting Standard 36 introduced
substantial subjectivity while testing goodwill for impairment, this
study aims to establish if management exploits the discretion and
performs the impairment test of goodwill opportunistically. The
presence of discretion, while applying impairment test, is tested on
the sample of Italian publicly traded companies in the period of the
current financial crisis. Despite the fact that the sample of companies
consists of those with market to book ratio less than one, only 26% of
the companies recorded a goodwill write-off. The logistic regression
was used to test contracting and reporting incentives. The results
of the analysis indicate that even in the case of IFRS users some
incentives exist, while recognising the impairment losses of goodwill.
Keywords
Goodwill; impairment testing; earnings management; IFRS; financial crisis
Hrčak ID:
171718
URI
Publication date:
22.12.2016.
Visits: 1.607 *