本研究探討企業頻繁變動資產減損認列對盈餘品質之影響。首先，檢測同一年度不同季別同時有認列減損及迴轉(視為變動組)的公司其盈餘品質是否高於同一年度中僅認列資產減損或減損迴轉(視為未變動組)的公司。其次，進一步將公司按照治理機制好壞劃分兩組，探討前述頻繁變動資產減損認列對盈餘品質的影響，在不同的公司治理條件是否有所不同。 本研究以裁決性應計數絕對值作為盈餘品質的衡量，實證結果發現，頻繁變動前期資產減損的公司(變動組)，相較於同一年度僅認列減損或迴轉之公司(未變動組)，有較高的盈餘品質。此外，前述變動組有較佳盈餘品質的結論僅存在公司治理較佳的樣本，而在公司治理較差的樣本，變動組與未變動組的盈餘品質並無顯著差異。

This study primarily explores the influence of rapid and frequent reversals of prior-quarter asset impairment recognition on the earnings quality of firms. Firms that recognize asset impairment losses in a quarter and reverse them in the subsequent quarters of the same year and firms that recognize impairment reversals in a quarter and recognize impairment losses in the subsequent quarters are examined. We use the absolute level of abnormal accruals as a proxy for earnings quality and compare the earnings quality of firms that reverse asset impairment losses or loss reversals recognized in the prior quarter of the year (the changed group) with the earnings quality of firms that do not (the unchanged group). The empirical results reveal that the changed group has lower abnormal accruals than those of the unchanged group, implying that rapid and frequent reversals of prior-quarter asset impairment recognition are used for reflecting changes in asset values rather than earnings manipulation. The changed group has higher earnings quality relative to the unchanged group. We classified the sample firms into two subgroups according to the strength of their corporate governance. We find that the aforementioned higher earnings quality in the changed group exists only in the strong governance subgroup. This finding supports the hypothesis that strong corporate governance guarantees rapid and frequent reversals of prior-quarter asset impairment recognition for timely reflection of asset value changes.

Using data on listed firms in Taiwan that recognized impairment losses, loss reversals, or both in any quarter of a given year from 2005 to 2010, this paper investigates the impact of frequent and rapid reversals of prior quarter impairment recognition in a certain year on earnings quality. We use the absolute level of abnormal accruals as a proxy for earnings quality and compare the earnings quality of firms that reverse asset impairment losses or loss reversals recognized in the prior quarter of the year (the changed group) with the earnings quality of firms that do not (the unchanged group). The empirical results reveal that the changed group has lower abnormal accruals than the unchanged group does, implying that rapid and frequent reversals of prior-quarter asset impairment recognition are used to reflect changes in asset values rather than to manipulate earnings. We further classify the sample firms into two subgroups according to the strength of their corporate governance. We find that the aforementioned higher earnings quality in the changed group exists only in the subsample of strong governance. This finding supports the hypothesis that corporate governance guarantees the rapid and frequent reversals of prior-quarter asset impairment recognition for timely reflection of asset value changes. The study provides some implications for investors and regulators. Taiwanese authorities issued SFAS No. 35 Accounting Standards for Asset Impairments in July 2004 to increase the transparency of financial reporting. However, uncertainty regarding changes in asset values gives rise to potential managerial discretion in the timing and amount of asset write-off recognition. Prior studies document that the timing and amount of asset write-offs are related to the motivation for implementing “big bath” and “income smoothing.” This paper finds that the implementation of SFAS No. 35 improves the quality of financial reporting if the companies experience sound corporate governance. That is, the effectiveness of SFAS No.35 depends on the strength of corporate governance quality.

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