The impairment test of goodwill: an empirical analysis of incentives for earnings management in Italian publicly traded companies

Bojana Korošec, Mateja Jerman and Polona Tominc

Economic Research-Ekonomska Istraživanja, 2016, vol. 29, issue 1, 162-176

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.

Date: 2016
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/1331677X.2016.1164923 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:reroxx:v:29:y:2016:i:1:p:162-176

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/rero20

DOI: 10.1080/1331677X.2016.1164923

Access Statistics for this article

Economic Research-Ekonomska Istraživanja is currently edited by Marinko Skare

More articles in Economic Research-Ekonomska Istraživanja from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().