Sun Yat-Sen Management Review

  Journal Fullview

Sun Yat-Sen Management Review  2017/12

Vol. 25, No.4  p.935-965


The Determinants and Market Reaction of Goodwill Impairment Losses
(137_M5a4342f960313_Full.pdf 1,062KB)

Lanfeng Kao, Yu-Chun Chen/

Department of Finance, National University of Kaohsiung; Department of Finance, National University of Kaohsiung



(137_M5a4342f960313_Abs.pdf(File does not exist))




In this paper we examine the market reaction to goodwill impairment loss and the determinants of recognition of goodwill impairments. Positive pre-event abnormal returns and negative post-event abnormal returns are observed around the write-offs announcement. After controlling for the potential earnings announcement effects, we find that the pre-event abnormal returns are not significantly related to impairment losses. This implies that observed positive stock reaction before the announcement date is attributable to the good earnings news and managers tent to announce goodwill write-offs when earnings news is good. The post-event abnormal returns are significantly negatively related to impairment losses after controlling for earnings announcement effects. The regression results support the arguments that goodwill impairment announcements have negative impacts on stock returns and the information of goodwill write-offs does not leak before the announcement date. As to the determinants of recognition of goodwill impairments, the empirical evidence shows that goodwill impairment losses are associated with the loss of economic values of goodwill and the managers’ discretionary behaviors.

(137_M5a4342f960313_Abs.pdf(File does not exist))


Goodwill, Impairments, SFAS No.35

Financial Accounting

Policy and management implications
(Available only in Chinese)

我國為了與國際會計準則IAS No. 36 Impairment of Assets接軌,會計研究發展基金會於2004年7月公布財務會計準則第35號公報《資產減損之會計處理準則》,第35號公報實施的目的在於降低資產帳面價值與實際價值之間的差距,以提升財務報導的透明度,但商譽價值的不確定性、經理人對商譽減損的高度裁量權、商譽會計處理與其他資產的差異,以及商譽減損認列頻率顯著較低,使得商譽減損的動機與股價效果與其他資產有所差異,應該單獨予以分析。 本研究的研究結果可提供主管機關與投資人了解商譽公報的效果,也延伸目前對商譽減損相關研究。本研究發現,商譽減損資訊大都是跟隨各季盈餘宣告一起釋放出,商譽減損的訊息事先無法被投資人預期到,以及經理人傾向於選擇在季盈餘有好消息時提列商譽減損,因此,商譽減損宣告前因為股價提前反應盈餘的好消息,會呈現正向反應,一旦公司宣告商譽減損後,股價會針對先前未預期到的減損宣告進行反向修正。因此,當公司擁有較高商譽資產,因為商譽本身價值較主觀,評價較困難,經理人在提列損失有更高的裁量權,投資人對於商譽減損較固定資產減損更不容易事先預期到,因此投資風險顯然較高。投資人不可忽視這方面的風險。


楊朝旭和吳幸蓁,2009,「資產減損之決定因素與盈餘資訊性後果:論公司治理之角色」,會計評論,第48期:67~114。(Young, C. S. and Wu, S. J., 2009, “The Determinants and Effects on Earnings Informativeness of Asset Impairments: The Role of Corporate Governance,” The International Journal of Accounting Studies, No. 48, 67-114.)
Amir, E. and Livnat , J., 1996, “Multiperiod Analysis of Adoption Motives: The Case of SFAS No. 106,” The Accounting Review, Vol. 71, No. 4, 539-553.
Ball, R. and Brown, P., 1968, “An Empirical Evaluation of Accounting Income Numbers,” Journal of Accounting Research, Vol. 6, No. 2, 159-178.
Bartov, E., Lindahl, F. W., and Ricks, W. E., 1998, “Stock Price Behavior Around Announcements of Write-Offs,” Review of Accounting Studies, Vol. 3, No. 4, 327-346.
Beatty, A. and Weber, J., 2006, “Accounting Discretion in Fair Value Estimates: An Examination of SFAS 142 Goodwill Impairments,” Journal of Accounting Research, Vol. 44, No. 2, 257–288.
Beaver, W., Lambert, R., and Morse, D., 1980, “The Information Content of Security Prices,” Journal of Accounting and Economics, Vol. 2, No. 1, 3-28.
Bens, D., Heltzer, W., and Segal, B., 2011, “The Information Content of Goodwill Impairments and SFAS 142,” Journal of Accounting, Auditing & Finance, Vol. 26, No.3, 527–555.
Cameron, A. B. and Stephens, L., 1991, “The Treatment of Non‐Recurring Items in the Income Statement and Their Consistency with FASB Concept Statements,” Abacus, Vol. 27, No. 2, 81-96.
Collins, D. W. and Kothari, S. P., 1989, “An Analysis of Intertemporal and Cross-Sectional Determinants of Earnings Response Coefficients,” Journal of Accounting and Economics, Vol. 11, No. 2-3, 143-181.
Chao, C. L., 2006, “An Examination of SFAS No. 35: Adoption Timing Motives, Write-Off Characteristics, and Market Reaction,” International Journal of Accounting Studies, Special Issue 77-120.
Collins, D. W., Kothari, S. P., Shanken J., and Sloan, R. G., 1994, “Lack of Timeliness and Noise as Explanations for the Low Contemporaneuos Return-Earnings Association,” Journal of Accounting and Economics, Vol. 18, No. 3, 289-324.
DeFond, M. L. and Jiambalvo, J., 1994, “Debt Covenant Violation and Manipulation of Accruals,” Journal of Accounting and Economics, Vol. 17, No. 1-2, 145-176.
Duh, R. R., Lee, W. C., and Lin, C. C., 2009, “Reversing an Impairment Loss and Earnings Management: The Role of Corporate Governance,” The International Journal of Accounting, Vol. 44, No. 2, 113-137.
Easton, P. D., Harris, T., and Ohlson, J., 1992, “Aggregate Accounting Earnings Can Explain Most Security Returns: The Case of Long Event Windows, ” Journal of Accounting and Economics, Vol. 15, 119-141.
Elliott, J. A. and Shaw, W. H., 1988, “Write-Offs as Accounting Procedures to Manage Perceptions,” Journal of Accounting Research, Vol. 26, 91-119.
Francis, J., Hanna, J. D., and Vincent, L., 1996, “Causes and Effects of Discretionary Asset Write-Offs,” Journal of Accounting Research, Vol. 34, No. 3, 117-134.
Hogan, C. E. and Jeter, D. C., 1998, “The Information Content of Restructuring Charges: A Contextual Analysis,” Working Paper, Vanderbilt University.
Jordan, C. E. and Clark, S. J., 2004, “Big Bath Earnings Management: The Case of Goodwill Impairment Under SFAS No. 142,” Journal of Applied Business Research, Vol. 20, No. 2, 63-70.
Kothari, S. and Sloan, R., 1992, “Information in Prices about Future Earnings Implications for Earnings Response Coefficient,” Journal of Accounting and Economics, Vol. 15, 143-172.
Li, Z., Shroff, P., Venkataraman, R., and Zhang, I. X., 2011, “Causes and Consequences of Goodwill Impairment Losses,” Review of Accounting Studies, Vol. 16, No. 4, 745-778.
Long, Y., 2005, “Essays on SFAS 142: Adoption Timing Motives, Market Reaction and Relation between Impairment and Overpayment in Acquisitions”, Working Paper, Stanford University.
Ramanna, K., 2008, “The Implications of Unverifiable Fair-Value Accounting: Evidence from the Political Economy of Goodwill Accounting,” Journal of Accounting and Economics, Vol. 45, No. 2-3, 253-281.
Ramanna, K. and Watts, R. L., 2012, “Evidence on the Use of Unverifiable Estimates in Required Goodwill Impairment,” Review of Accounting Studies, Vol. 17, No. 4, 749-780.
Rees, L., Gill, S., and Gore, R., 1996, “An Investigation of Asset Write-Downs and Concurrent Abnormal Accruals,” Journal of Accounting Research, Vol. 34, 157-169.
Riedl, E. J, 2004, “An Examination of Long-Lived Asset Impairments, The Accounting Review, Vol. 79, No. 3, 823-852.
Sevin, S. and Schroeder, R., 2005, “Earnings Management: Evidence from SFAS no. 142 Reporting,” Managerial Auditing Journal, Vol. 20, No. 1, 47-54.
Sweeney, A. P., 1994, “Debt-Covenant Violations and Managers' Accounting Responses,” Journal of Accounting and Economics, Vol. 17, No. 3, 281-308.
Thakor, A, 1987, “Discussion of Asset Writedowns: Managerial Incentives and Security Returns,” Journal of Finance, Vol. 42, 661-663.
Watts, R. L. and Zimmerman, J. L., 1986, Positive Accounting Theory, Englewood cliffs, N. J. Prentice-Hall.
Zucca, L. and Campbell, D., 1992, “A Closer Look at Discretionary Writedowns of Impaired Assets,” Accounting Horizons, Vol. 6, No. 3, 30-41.