This study investigates how reporting incentives influence firms' accounting choices when they are required to use standard IAS 36 to account for goodwill impairment. Specifically, we examine if earnings management motives are associated with the decision and the magnitude of annual goodwill impairment losses reported by French firms. Based on a sample of 720 observations derived from 105 groups of companies that belong to the SBF 250 during the period 2006-2012, results of this study confirm largely our predictions. Indeed, main results show that the decision to record goodwill impairment losses is driven by both CEO change and financial crisis motives. In addition, the findings indicate that managers overstate annual goodwill impairment losses to meet earnings management incentives related not only to CEO change and financial crisis but also to earnings smoothing and big bath accounting. The robustness tests reveal that firms with higher leverage tend to record an increased goodwill impairment loss in response to debt renegotiation incentive. This study illuminates the accounting standard-setters in understanding managers' reporting choices related to the use of discretion afforded by standard IAS 36 on goodwill impairment in France in order to state on its practical usefulness. Thus, it contributes to the international actual debate on goodwill impairment.

The present paper investigates the determinants of goodwill impairment losses under IAS 36. More specifically, this study examines the impact of earnings management, corporate governance and financial crisis on goodwill impairment losses reported by French firms following the adoption of IAS 36 on purchased goodwill. Based on a sample of 730 observations from 107 groups of companies that belong to the SBF 250 over the period 2006-2012, the findings of this research confirm largely our predictions. Indeed, main results show that managers impair goodwill to meet earnings management motives linked to CEO change, earnings smoothing, big bath accounting and financial crisis. Moreover, they reveal that French firms impair goodwill to respond to debt renegotiation hypothesis. In addition, the findings demonstrate that French firms audited by a Big Four auditor record lower goodwill impairment losses. Thus, they highlight the role of audit quality to constrain managerial opportunism associated to goodwill impairment. This study illuminates the accounting standard-setters in understanding the determinants of goodwill impairment losses in France under IAS 36. Therefore, it contributes to the international actual debate on goodwill and to the international accounting literature.