Causes and Consequences of ＂Discretionary＂ Goodwill Impairments

Rosemond Desir ； Ray J. Pfeiffer, Jr. ； Jeffrey R. Casterella ； Julia Kokina

《Advances in Quantitative Analysis of Finance and Accounting》 15期 (2017/12) Pp. 185-213

https://doi.org/10.6293/AQAFA.201712_15.0007

摘要

Empirical research since the enactment of SFAS 142, ＂Goodwill and Other Intangible Assets,＂ (now, Accounting Standards Codification [ASC] section 350-20) provides evidence that managers use the discretion afforded under the new rule to manage earnings through discretionary goodwill impairments. In this paper, we examine a group of firms with discretionary goodwill impairments to understand in more detail the goodwill impairment choices that managers make under current accounting rules. First, we explore whether there exist contextual factors that inhibit managers' use of discretion. While we find that there are significant associations between these factors and managers' reporting choices, we also find evidence that firms with discretionary goodwill impairments experience poor stock return performance both in the short and long term compared to firms with nondiscretionary impairments. In light of the Financial Accounting Standard Board's (FASB) recent discussions on amortization versus impairment of goodwill, these findings are important for our understanding of managers' impairment reporting choices and the subsequent market's reaction to these choices.

關鍵字

Goodwill ； Accounting Standards ； Earnings Management ； Auditor Reputation ； Analyst Following ； Legal Environment

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