Attribution Locus and the Timeliness of Long-lived Asset Write-downs

Yao-Lin Chang, Chun-Yang Lin, Chi-Chun Liu and Stephen G. Ryan

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Abstract: We examine the relative timeliness with which write-downs of long-lived assets incorporate adverse macroeconomic and industry outcomes versus adverse firm-specific outcomes. We posit that users of financial reports are more likely to attribute adverse firm-specific outcomes to suboptimal managerial actions, which provide managers with more incentive to delay write downs. We provide evidence that, controlling for other incentives to manage earnings, firms record write-downs in the current year that are driven by adverse macroeconomic and industry outcomes during both the current year and the next year, but they record write-downs driven by adverse firm-specific outcomes only in the current year.

Date: 2025-09
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