Disclosure Transparency and Disagreement Among Economic Agents: The Case of Goodwill Impairment

Andreicovici, Ionela; Jeny, Anne; Lui, Daphne

doi:10.1080/09638180.2019.1677259

Cited by 17 publications

(14 citation statements)

References 55 publications

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“…The evidence suggests that the quality of these disclosures is positively related to analyst forecast accuracy (André et al, 2018; and negatively related to forecast dispersion (André et al, 2018). Consistent with the latter finding, Andreicovici et al (2020) shows that the transparency of firms' goodwill impairment disclosure is related to lower disagreement -among analysts as well as between analysts and managers -about the amounts and timing of impairments. 34 further shows that 'prospective entityspecific impairment-testing disclosures are negatively associated with cost of capital [and analyst forecast dispersion] whereas descriptive disclosures exhibit no association with cost of capital' (p. 583).…”

Section: Disclosures: Do They Make Manda Transactions Transparent?mentioning

confidence: 56%

“…Construct validity problems also occur in studies that attempt to measure the quality of goodwill disclosures using manual content analysis to construct quality and compliance indices (e.g., Andreicovici et al, 2020;Chen et al, 2019;Mazzi et al, 2017). These scoring models rely on researchers' subjective assessments and interpretations of disclosures, including the materiality of items, which affects weighting.…”

Section: Construct Validitymentioning

confidence: 99%

“…45 Construct validity can be an issue when a study introduces a novel measure to operationalize a theoretical concept. To illustrate, Andreicovici et al (2020) reports tests of associations between a dependent variable -a disclosure transparency index composed of impairment-test-related footnote disclosures in annual reports -and a novel independent variable intended to capture analyst disagreement. To identify whether financial analysts anticipated the amount and timing of impairment, the study's measure of analyst disagreement relies on reports issued after the goodwill impairment announcements.…”

Section: Internal Validitymentioning

confidence: 99%

See 2 more Smart Citations

Empirical Goodwill Research: Insights, Issues, and Implications for Standard Setting and Future Research

Amel‐Zadeh

Glaum

Sellhorn³

2021

European Accounting Review

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This paper reviews the empirical literature on the determinants and decision usefulness of goodwill reporting. We structure our discussion around five guiding questions that reflect longstanding policy issues: recognition, initial and subsequent measurement, disclosure, and the role of governance and monitoring. In addition to summarizing the findings, we assess the validity of the evidence. Our review indicates that goodwill amounts, on average, are associated with the underlying economics of the combining firms but are also shaped by managerial incentives and institutional context. Empirical research does not allow us to conclude whether current goodwill accounting rules provide for an optimal degree of discretion. Nonetheless, our analysis yields a number of policy implications and research suggestions. In addition to pointing out new research questions that could be addressed by further archival research, we advocate reproduction studies to test the generalizability of existing findings across contexts, and we encourage standard setters to initiate quasi-experiments to generate causal evidence and to render policymaking more accountable. We further suggest that researchers make more use of behavioral theories and non-archival methods to elucidate the motives and interactions of decision-makers in goodwill accounting.

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Section: Disclosures: Do They Make Manda Transactions Transparent?mentioning

confidence: 56%

Section: Construct Validitymentioning

confidence: 99%

Section: Internal Validitymentioning

confidence: 99%

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Empirical Goodwill Research: Insights, Issues, and Implications for Standard Setting and Future Research

Amel‐Zadeh

Glaum

Sellhorn³

2021

European Accounting Review

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“…Por outro lado, Andreicovici, Jeny & Lui (2020) observaram que, na Europa, o maior nível de transparência na divulgação do goodwill estava associado a uma maior concordância entre os analistas. Assim como averiguado por André, Dionysiou e Tsalavoutas (2018), que identificaram que maiores níveis de conformidade com os requisitos exigidos pela IAS 38 de Ativos intangíveis possuíam uma associação negativa com a dispersão de provisão dos analistas, ou seja, quanto mais a informação divulgada estava atendendo aos requisitos estabelecidos pela IAS 38, melhor era a acurácia da previsão.…”

Section: Introductionunclassified

Análise Do Impacto Do Goodwill Na Previsão De Lucro Por Analistas Financeiros:

Moraes

Nardi

2023

Contab. Vista & Rev.

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O analista financeiro possui condições de reduzir a assimetria de informações entre empresas e investidores ao emitir previsões de resultados, contribuindo para o funcionamento do mercado de capitais, peça importante para o crescimento e financiamento das empresas. Nesse contexto, não foram encontrados estudos que relacionassem, de maneira direta, a existência de goodwill nas empresas brasileiras com a acurácia dos analistas financeiros. Portanto, o objetivo do estudo foi analisar a relação entre o goodwill e a acurácia da previsão de resultado por analistas financeiros. O foco foram as empresas brasileiras e norte-americanas de capital aberto, no período trimestral de 2010 a 2019, utilizando como método a regressão com dados em painel. Os resultados indicaram que, no Brasil, a existência de goodwill impacta negativamente na acurácia da previsão dos analistas, mas positivo no mercado norte-americano. Testes de confirmação foram aplicados considerando o grupo de ativo intangível, cujos resultados corroboraram com os encontrados para goodwill. Assim o estudo evidencia que o uso goodwill pode impactar de forma diferente a acurácia dos analistas diante de mercado distintos, especificamente quanto à origem legal, desenvolvimento do mercado de capitais, poder de enforcement, entre outros fatores. Isso deve ser levado em consideração nas decisões de investimento de instituições financeiras e participantes do mercado de capitais. Também contribui com a literatura na linha de pesquisa, ao sinalizar que a subjetividade presente no goodwill pode influenciar de modo distinto a acurácia dos analistas, fato que deve ser controlado em seus modelos de previsão.

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“…Thus, controlling shareholders may be incentivized to use all their power to relieve margin call pressure when they have share pledged (Chan et al , 2018; Ouyang et al , 2019; Xu et al , 2020). Given the complexity of goodwill accounting and discretion in the impairment test (Andreicovici et al , 2019), we predict that controlling shareholders involved in share pledging may understate or simply not recognize goodwill impairment losses to maintain share prices. With the increase in the stock price crash risk, the manipulation of goodwill impairment would be stronger because of the higher probability of the share price falling below the warning line.…”

Section: Introductionmentioning

confidence: 99%

Do controlling shareholders share pledging affect goodwill impairment? Evidence from China

Ouyang

2021

IJAIM

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Purpose The purpose of this study is to examine the impact of controlling shareholders’ share pledging on goodwill impairment. Design/methodology/approach This study empirically investigates the effect of controlling shareholders’ share pledging on both the decision and amount of goodwill impairment for Chinese listed firms from 2007 to 2017. Findings This study finds that the proportion of controlling shareholders’ share pledging is negatively related to both impairment decisions and amounts; these negative relationships are intensified when firms face high stock price crash risks. In addition, the empirical results show that firms with larger share pledging are less likely to recognize goodwill impairment or are likely to record relatively smaller impairment amounts when they are followed by fewer financial analysts. Originality/value Most of the relevant literature has focused on managers’ behaviors toward goodwill impairments, while less attention has been given to goodwill impairments from the perspective of controlling shareholders. In fact, controlling shareholders may have strong incentives to protect their control rights when they exercise disproportionate control rights, especially in China. Given the high ownership concentration, prior studies may not have adequately explained the agency problem of controlling shareholders in goodwill impairment. This study uses share pledging as a case to fill this gap. Specifically, it investigates whether both goodwill impairment decisions and amounts are affected by controlling shareholders’ share pledging.

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Disclosure Transparency and Disagreement Among Economic Agents: The Case of Goodwill Impairment

Cited by 17 publications

References 55 publications

Empirical Goodwill Research: Insights, Issues, and Implications for Standard Setting and Future Research

Empirical Goodwill Research: Insights, Issues, and Implications for Standard Setting and Future Research

Análise Do Impacto Do Goodwill Na Previsão De Lucro Por Analistas Financeiros:

Do controlling shareholders share pledging affect goodwill impairment? Evidence from China

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