Financial Disclosure and the Board: A Case for Non-Independent Directors

Biondi, Yuri; Giannoccolo, Pierpaolo; Rebérioux, Antoine

doi:10.2139/ssrn.1540027

Cited by 1 publication

(1 citation statement)

References 35 publications

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“…Overall, the level of information is not influenced by the quality of corporate governance: specifically, we noted that firm-specific expertise, strictly required in order to identify and control the chain of significant estimates on which an impairment test is based, could be more difficult to obtain for independent directors (Biondi et al, 2010).…”

Section: Discussionmentioning

confidence: 99%

The impact of IAS 36 on goodwill disclosure: Evidence of the write-offs and performance effects

D'Alauro

2013

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Purpose: This paper aims at examining the quality of corporate disclosure about goodwill impairment and its relationship with goodwill write-offs and earnings performance, exploiting an accounting regulation that allows significant unverifiable estimates whilst requires a high level of information.

Design/methodology/approach: This study, based on a sample of Italian and British firms with market indications of goodwill impairment, verifies through a both univariate and multivariate analysis whether the level of disclosure is positively related to the magnitude of goodwill write-off and to earnings performance, using a self-constructed score of mandatory disclosure about goodwill impairment tests in accordance with IAS 36 requirements.

Findings: In a general context of insufficient information, we find that for Italian firms both the magnitude of goodwill write-offs and earnings performance are significantly and positively associated to the level of mandatory disclosure about goodwill impairment tests. For the British firms, as companies more used to impairment test rules, the data does not confirm any significant association.

Research limitations/implications: The objective of this study is to test the initial impact of IAS 36 in the first years of its application, selecting a sample of firms belonging to limited but significant activity sectors. Future research could usefully analyse a wider sample of firms, also extending the time period of analysis. In any case, the findings of our study are consistent with the insights of earnings management theory, suggesting that the subjectivity inherent in impairment test assumptions could be used opportunistically by managers.

Originality/value: This research investigates questions still relatively unexplored, concerning the effects of goodwill write-offs and accounting performance on corporate disclosure about goodwill impairment test. Based on this analysis, the study shows that corporate disclosure could be a “litmus paper” able to test the degree of good faith with which each firm has implemented IAS 36 requirements.

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Section: Discussionmentioning

confidence: 99%

The impact of IAS 36 on goodwill disclosure: Evidence of the write-offs and performance effects

D'Alauro

2013

View full text Add to dashboard Cite

show abstract

Financial Disclosure and the Board: A Case for Non-Independent Directors

Cited by 1 publication

References 35 publications

The impact of IAS 36 on goodwill disclosure: Evidence of the write-offs and performance effects

The impact of IAS 36 on goodwill disclosure: Evidence of the write-offs and performance effects

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