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The impacts of asset impairments on performance in the Taiwan listed electronics industry

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  • Wei-Kang Wang
  • Yee Chuann Chan
  • Wen-Min Lu
  • Hua Chang

Abstract

This paper explores whether the recognition of asset impairments provides an opportunity for earnings management by examining changes in the performance. First, we apply a dynamic data envelopment analysis model to evaluate the operating performance of Taiwanese electronics firms for the period from 2004 to 2013. Statistical tests are next applied to assess the average efficiency variation between the periods before and after firms recognise asset impairments. Several empirical findings are as follows: managers recognise asset impairments when their firms have poor performance as compared to other firms that do not record any asset impairments recognition, and that their performance keeps on improving in both the year of recognising asset impairments and the year after asset impairments recognition. That is, managers tend to recognise asset impairments to improve operating performance, while the firms are performing poorly, supporting the opportunistic behaviour theory.

Suggested Citation

  • Wei-Kang Wang & Yee Chuann Chan & Wen-Min Lu & Hua Chang, 2015. "The impacts of asset impairments on performance in the Taiwan listed electronics industry," International Journal of Production Research, Taylor & Francis Journals, vol. 53(8), pages 2410-2426, April.
    • Handle: RePEc:taf:tprsxx:v:53:y:2015:i:8:p:2410-2426
    DOI: 10.1080/00207543.2014.972526
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    Cited by:

    1. Wei‐Kang Wang & Wen‐Min Lu & Qian Long Kweh & Wun‐Ya Siao, 2020. "Related‐party transactions and corporate performance following the adoption of International Financial Reporting Standards in Taiwan," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 41(3), pages 371-379, April.
    2. Tadeusz Dudycz & Jadwiga Praźników, 2020. "Does the Mark-to-Model Fair Value Measure Make Assets Impairment Noisy?: A Literature Review," Sustainability, MDPI, vol. 12(4), pages 1-24, February.

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