Impairment of Assets and Market Reaction during COVID-19 Pandemic on the Example of WSE

Abstract

The main task of the article is to examine the impact of the reported impairment of assets (IoA) on the market reaction of investors on the Warsaw Stock Exchange [WSE] in the crisis condition caused by the COVID-19 pandemic. There is a need to verify whether the disclosure of this information in the period of economic downturn will cause a similar negative reaction as in previous topics in this area. Research undertaken in this article helps identify the rules of behaviour (in the short term) whether the reaction of investors on updating the company’s assets in crisis conditions is different than in times of prosperity. The main hypothesis will be verified using the event study methodology. It allows to verify whether the upcoming information about IoA during the COVID-19 pandemic confirms an existence of statistically significant negative abnormal returns. Based on the 55 cases of current reports informing about IoA, which were submitted to the investors in the year 2020 and finally qualified for the research sample, I have not observed statistically significant negative abnormal returns on the adjacent days. The results are different from those obtained by researchers who study the market reaction to the IoA under non-crisis conditions of the economy.

The Case Experience of Integrating the SDGs into Corporate Strategies for Financial Risk Management Based on Social Responsibility (with the Example of Russian TNCs)

“…The considered case experience of integration of the SDGs into the strategies of financial risk management based on social responsibility with the example of the largest Russian companies allows specifying the theory of financial business risks management that is given in the works of (Bouri et al 2021;Drozdowski et al 2021;Gennaro 2021;Gonçalves et al 2021;Jan et al 2021;Lisicki 2021;Tanggamani et al 2020;and Zhao and Xiao 2019), as well as reconsidering the cyclicity of financial business risks management (Figure 1).…”

“…The framework of the traditional commercial approach to financial risk management (Bouri et al 2021;Drozdowski et al 2021;Gennaro 2021;and Lisicki 2021) and the corresponding specifics of corporate social responsibility at different phases of the economic cycle (in the period of stability and during a crisis) (Gonçalves et al 2021;Jan et al 2021;Tanggamani et al 2020;and Zhao and Xiao 2019) formed the existing theory of financial business risks management.…”

Documenting, Accounting, and Valuing Material Damages Caused by Armed Aggression to the Non-Current Assets of the Company

“…C. Gaio and others researched the impact of financial crisis (e.g., 2008-2009 crises) on the non-financial assets' impairments and concluded that European companies recognized less impairment during the crisis [15]. Considering Eastern European markets to which Ukraine belongs as well, B. Lisicki focused on examining the impact of the reported impairment of assets on the market reaction on the example of Warsaw Stock Exchange in the crisis conditions driven by the COVID-19 pandemic [16].…”

COVID-19 Research Streams Emerging in International Financial Reporting Standards Related Studies

“…In regards to Topic 2, the authors focus on the adequacy of the value of the information contained in IFRS 1. From this perspective, the authors examine the impact of the reported impairment of assets on the market reaction of investors, in the context of the COVID-19 pandemic (Lisicki, 2021). In this study, authors conclude for a lack of reaction of the investors to the disclosure of information on impairment of assets.…”