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The Effect of Board Changes on Writedowns of Non–Current Assets: evidence from New Zealand

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  • Kamran Ahmed
  • Melvin Roush

Abstract

This study reports the results of an empirical study that examined the impact of changes in the board of directors on writedowns of non–current assets. Using 337 annual reports of the firms listed on the New Zealand Stock Exchange for 7 years from 1993 to 1999, the results show that changes in the board of directors is a statistically significant determinant of both writedown decision and the dollar amount of writedowns. The results also show that the regression coefficient and the significance level of board restructure are materially higher when changes in chief executive officer are incorporated in the model estimation. Corporate firm size, as measured by total assets at balance date, is found to be another significant determinant. Other corporate attributes such as leverage, operating performance and term borrowings in the subsequent years are not significant factors. However, a firm's growth opportunities provide some support in explaining the dollar amount of writedowns. The results are robust to alternative proxies and the time effect is not evident over the 7–year period.

Suggested Citation

  • Kamran Ahmed & Melvin Roush, 2002. "The Effect of Board Changes on Writedowns of Non–Current Assets: evidence from New Zealand," Corporate Governance: An International Review, Wiley Blackwell, vol. 10(4), pages 278-287, October.
    • Handle: RePEc:bla:corgov:v:10:y:2002:i:4:p:278-287
    DOI: 10.1111/1467-8683.00292
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