IDEAS home Printed from https://ideas.repec.org/a/ete/revbec/20090201.html
   My bibliography  Save this article

What Determines Goodwill Impairment?

Author

Listed:
  • Arnt Verriest
  • Ann Gaeremynck

Abstract

This study investigates determinants of goodwill impairment decisions and their disclosure quality. Under IAS36 goodwill is subject to an annual impairment test in which the carrying amount of goodwill is not allowed to exceed the recoverable amount. However, valuing this recoverable amount is subject to substantial managerial discretion. Therefore, we predict that ownership concentration, corporate governance quality and firm performance provide incentives for managers to engage in goodwill impairment or not, and thus determine financial reporting quality. We construct a sample of firms that should engage in goodwill impairment. Our results convey that better performing firms and firms with stronger corporate governance mechanisms are more likely to impair. Further, ownership structure and governance have a weak impact on the degree of impairment disclosure.

Suggested Citation

  • Arnt Verriest & Ann Gaeremynck, 2009. "What Determines Goodwill Impairment?," Review of Business and Economic Literature, KU Leuven, Faculty of Economics and Business (FEB), Review of Business and Economic Literature, vol. 0(2), pages 106-128.
  • Handle: RePEc:ete:revbec:20090201
    as

    Download full text from publisher

    File URL: https://lirias.kuleuven.be/bitstream/123456789/249170/1/What_Determines_Goowill_Impairment1.doc
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Avallone, Francesco & Quagli, Alberto, 2015. "Insight into the variables used to manage the goodwill impairment test under IAS 36," Advances in accounting, Elsevier, vol. 31(1), pages 107-114.
    2. Atanas Atanasov, 2021. "COVID-19 as a Triggering Event in the Goodwill Impairment Testing," Izvestia Journal of the Union of Scientists - Varna. Economic Sciences Series, Union of Scientists - Varna, Economic Sciences Section, vol. 10(3), pages 177-184, December.
    3. Begoña Giner & Francisca Pardo, 2015. "How Ethical are Managers’ Goodwill Impairment Decisions in Spanish-Listed Firms?," Journal of Business Ethics, Springer, vol. 132(1), pages 21-40, November.
    4. Atanasov, Atanas, 2018. "Фактори, Влияещи Върху Обезценката На Репутацията [Goodwill Impairment Factors]," MPRA Paper 87625, University Library of Munich, Germany.
    5. Hannu Schadewitz & Jonas Spohr, 2022. "Gender diverse boards and goodwill changes: association between accounting conservatism, gender and governance," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 26(3), pages 757-779, September.
    6. Francesco Avallone & Claudia Gabbioneta & Paola Ramassa & Marco Sorrentino, 2015. "Why Do Firms Write Off Their Goodwill? A Comparison of Different Accounting Systems," FINANCIAL REPORTING, FrancoAngeli Editore, vol. 2015(1), pages 23-40.
    7. Charlotte Disle & Philippe Protin & Nathalie Gonthier-Besacier & Frédéric Bertrand & Stéphane Périer, 2016. "Divulgation volontaire sur le Business model : le cas des entreprises du CAC40," Post-Print hal-01900531, HAL.
    8. Atanasov, Atanas, 2019. "Репутацията Като Обект На Счетоводството: Признаване, Оценяване, Оповестяване [Goodwill as an accounting object: initial recognition, measurement, disclosure]," MPRA Paper 97938, University Library of Munich, Germany.
    9. Ewa Wanda Maruszewska & Marzena Strojek-Filus & Jiří Pospíšil, 2019. "An Empirical Examination of Accounting Comparability: Goodwill Recognition and Disclosure in Selected Central European Countries," Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, Mendel University Press, vol. 67(5), pages 1309-1323.
    10. Atanasov, Atanas, 2017. "Управленски Аспекти На Счетоводната Обезценка На Търговската Репутация [Management Aspects of the Impairment of Goodwill]," MPRA Paper 85675, University Library of Munich, Germany.
    11. Nicola Giuseppe Castellano & Katia Corsi & Roberto Del Gobbo, 2015. "Goodwill Disclosure in Europe. Profiles of disclosing companies," Eastern European Business and Economics Journal, Eastern European Business and Economics Studies Centre, vol. 1(2), pages 32-65.
    12. Maciej Gierusz & Stanisław Hońko & Marzena Strojek-Filus & Katarzyna Świetla, 2022. "The Quality of Goodwill Disclosures and Impairment in the Financial Statements of Energy, Mining, and Fuel Sector Groups during the Pandemic Period—Evidence from Poland," Energies, MDPI, vol. 15(16), pages 1-20, August.
    13. Markéta Boučková, 2016. "Quality of Disclosed Information with Emphasis on Goodwill Impairment," European Financial and Accounting Journal, Prague University of Economics and Business, vol. 2016(2), pages 37-52.
    14. repec:eeb:15v1n2:v:1:y:2015:i:2:p:32-65 is not listed on IDEAS

    More about this item

    Keywords

    representation; elections; Parliament; self-employed; employers’organisations;
    All these keywords.

    JEL classification:

    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ete:revbec:20090201. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://edirc.repec.org/data/fekulbe.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: library EBIB (email available below). General contact details of provider: https://edirc.repec.org/data/fekulbe.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.