A cross-national analysis on the impact of enforcement on impairments of tangible assets under IFRS

Nikolaos I. Karampinis

Journal of International Accounting, Auditing and Taxation, 2021, vol. 42, issue C

Abstract: This study evaluates the potential indicators of tangible asset impairments (TAI) and their interaction with legal enforcement, using an international sample of 38 countries that follow International Financial Reporting Standards. Consistent with expectations, specific economic and opportunistic indicators demonstrate a significant relationship with TAI, and these are further affected by legal enforcement. In particular, empirical findings suggest that in weak enforcement countries, besides economic indicators, the opportunistic indicators of earnings smoothing and debt pressure are significantly related to TAI. In strong enforcement countries, the importance of economic indicators increases substantially, while the effect of the opportunistic debt-related indicator attenuates and the indicator of earnings smoothing is immaterial. This evidence suggests that legal enforcement constitutes a beneficial institutional attribute, but does not restrain all aspects of managerial opportunism.

Keywords: International Financial Reporting Standards; Tangible asset impairments; Enforcement; Incentives (search for similar items in EconPapers)
JEL-codes: G15 K20 M41 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jiaata:v:42:y:2021:i:c:s1061951820300598

DOI: 10.1016/j.intaccaudtax.2020.100358

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