Managerial ability and goodwill impairment: evidence from China

Abstract

PurposeThis paper aims to examine the effects of managerial ability (MA) on the likelihood and the timeliness of goodwill impairment and explore whether the desirable effect of MA vary with the degree of agency problems.Design/methodology/approachThe authors propose a unified framework to simultaneously examine the effects of MA on the likelihood and the timeliness of goodwill impairment by incorporating a market-based impairment indicator (denoted as BTM), MA and the interaction of BTM with MA to this study’s regression model to account for the likelihood of goodwill impairment. BTM addresses the timeliness of goodwill impairment.FindingsThis study finds that firms with higher MA have lower likelihood of goodwill impairment, and such firms are more likely to recognize goodwill impairment in a timely manner when the underlying value of goodwill is economically impaired. This desirable effect of MA is more pronounced in non-state-owned enterprise (SOEs) and firms without chief executive officer (CEO) duality.Practical implicationsFirms can reduce the losses arising from goodwill impairment by enhancing the ability of their management teams combined with improved corporate governance structure.Originality/valueThis paper provides novel insights on understanding the role of MA in not only reducing the likelihood but also enhancing the timeliness of goodwill impairment. The findings help advance the upper echelons theory by uncovering the heterogenous effects of executives with different levels of ability.

أثر إدارة الأرباح بالأنشطة الحقيقية على العلاقة بين القدرة الإدارية وخسارة اضمحلال قيمة الشهرة في ضوء الأداء المالي للشركات المدرجة بالبورصة المصرية

“…. Boennen & Glaum, 2014;Schatt et al, 2016;Knauer & Wöhrmann, 2016;Satt & Chetioui, 2017;Gros & Koch, 2020;Han & Tang, 2020;Han et al, 2021;Alshehabi et al, 2021;Amel-Zadeh et Darrough el al., 2014;Korošec et al, 2016;Brands, 2016;Sun, 2016;Stenheim & Madsen, 2016;Hassine & Jilan, 2017;Johnston et al, 2018;Killins et al, 2021;Huang & Xiong, 2022 (Sun, 2016;Moura et al, 2019;Huang et al, 2020 (Korošec et al, 2016;Huang & Sun, 2017;Johnston et al, 2018; . ‫ونقد‬ ‫وجدت‬ ‫بعض‬ ‫اسات‬ ‫الدر‬ (AbuGhazaleh et al, 2011;Korošec et al, 2016;Huang & Sun,2017;Glaum et al, (Johnston et al, 2018;Kabir & Rahman, 2020;Gros & Koch, 2020;Yuan et al, 2020;Li, 2020) ‫اضمحالل‬ ‫ة‬ ‫خسار‬ ‫قياس‬ ‫يتم‬ ‫أو‬ ، ‫ويأخذ‬ ‫ة‬ ‫الشير‬ ‫قيمة‬ ‫اضمحالل‬ ‫ة‬ ‫بخسار‬ ‫اف‬ ‫االعتر‬ ‫عند‬ ‫احد‬ ‫و‬ ‫القيمة‬ ‫يأخذ‬ ‫وىمى‬ ‫كمتغير‬ ‫ة‬ ‫الشير‬ ‫قيمة‬ ‫ذلك‬ ‫عدا‬ ‫فيما‬ ‫صفر‬ ‫القيمة‬ (Stenheim & Madsen, 2016;Glaum et al, 2018;Johnston et al, 2018;Yuan et al, 2020 (Sun, 2016;Baik et al, 2020;Huang & Xiong, 2022) ‫السابقة‬...…”

“…‫ونقد‬ ‫وجدت‬ ‫بعض‬ ‫اسات‬ ‫الدر‬ (AbuGhazaleh et al, 2011;Korošec et al, 2016;Huang & Sun,2017;Glaum et al, (Johnston et al, 2018;Kabir & Rahman, 2020;Gros & Koch, 2020;Yuan et al, 2020;Li, 2020) ‫اضمحالل‬ ‫ة‬ ‫خسار‬ ‫قياس‬ ‫يتم‬ ‫أو‬ ، ‫ويأخذ‬ ‫ة‬ ‫الشير‬ ‫قيمة‬ ‫اضمحالل‬ ‫ة‬ ‫بخسار‬ ‫اف‬ ‫االعتر‬ ‫عند‬ ‫احد‬ ‫و‬ ‫القيمة‬ ‫يأخذ‬ ‫وىمى‬ ‫كمتغير‬ ‫ة‬ ‫الشير‬ ‫قيمة‬ ‫ذلك‬ ‫عدا‬ ‫فيما‬ ‫صفر‬ ‫القيمة‬ (Stenheim & Madsen, 2016;Glaum et al, 2018;Johnston et al, 2018;Yuan et al, 2020 (Sun, 2016;Baik et al, 2020;Huang & Xiong, 2022) ‫السابقة‬ ‫اسات‬ ‫الدر‬ ‫اعتمدت‬ ‫و‬ . (Francis et al, 2008;Malmendier and Tate, 2009;Demerjian et al, 2013;Veltri et al, 2016;Yung and Chen, 2018;Baik et al, 2020 (Demerjian et al, 2012;Demerjian et al, 2013;Veltri et al, 2016;Yung and Chen, 2018;, Baik et al, 2020 (Demerjian et al, 2012;Veltri et al, 2016;Yung and Chen, 2018;, Baik et al, 2020 Demerjian et al, 2012Demerjian et al, , 2013Demerjian et al, , 2020Krishnan & Wang 2015;Veltri et al, 2016;Sun, 2016;Habib & Hasan, 2017;…”