Impairment Test and Disclosure: An International Comparison
26 Pages Posted: 21 Feb 2013
Date Written: May 12, 2009
Abstract
Introduction of the IAS/IFRS entails important changes for European companies, characterised by different accounting systems, including assessment and accounting of the impairment test which is one of the most fundamental issues. Our attention focuses on companies listed in the main European Stock Exchange Indexes (S&P/Mib, CAC 40 and FTSE 100) in which the impairment test is one of the most critical elements of company management. After a brief presentation of the main characteristics of the IAS 36, the aim of this paper is to study the effects of IAS 36 application on financial disclosure via an empirical analysis. The level of disclosure regarding the impairment test is compared among the three indexes and is studied in greater depth (69 items). In the paper the focus is on disclosure since, as the scholars also agree, financial communication does not represent a neutral process but affects the behaviour of the recipients, and consequently that of the prepares. Consolidated financial reports of 2006 and 2007 have been analysed: empirical results confirm that there are a lot of differences in disclosure level among the three countries and between companies with and without an impairment loss.
Keywords: IAS/IFRS, impairment test, disclosure
JEL Classification: M41
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