Why reduce profit? Accounting choice of impairments in Swedish listed corporations

Pernilla Broberg, Sven-Olof Yrjo Collin, Torbjorn Tagesson, Monika Axelsson and Charlotta Schele

International Journal of Accounting and Finance, 2011, vol. 3, issue 1, 49-71

Abstract: Positive accounting theory and institutional theory are used in conjunction in order to explain accounting choice. The theory is applied on IAS 36 (impairment of assets), and tested on a sample of listed Swedish corporations. We find that the choice is mainly induced by agency and general business factors and to a slighter degree by institutional factors. Especially, we find that institutional influence will be stronger when it is in the interest of important stakeholders; that impairments can be used as a mean of signalling trust to absent owners and that the institutional element of tradition cannot be tested separately from the agency element of opportunism.

Keywords: accounting choice; asset impairment; positive accounting theory; institutional theory; Sweden; stakeholders; trust; absent owners; tradition; opportunism. (search for similar items in EconPapers)
Date: 2011
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