IFRS Compliance in the Year of the Pig: The Practice of Goodwill Impairment Testing Among Large Hong Kong Firms During 2007

24 Pages Posted: 15 Feb 2010

See all articles by Tyrone M. Carlin

Tyrone M. Carlin

Southern Cross University; The University of Sydney Business School

Nigel Finch

Saki Partners

Dzung Manh Tran

affiliation not provided to SSRN

Date Written: February 14, 2010

Abstract

Several studies have suggested that the adoption of IFRS can enhance the quality of financial reports, in turn improving their reliability and usefulness (Wyatt, 2005; Barth et al., 2008). However, such studies generally assume that the introduction of IFRS guarantees consistency and compliance in practice. Given that goodwill impairment testing under IFRS presents a technically challenging task (Hoogendoorn, 2006; Wines et al., 2007) that can materially impact the determination of economic profit, this study focuses on assessing the compliance quality of a large sample of Hong Kong firms that are mature IFRS adopters. By examining the detailed disclosures made by 264 large listed firms in 2007, three years after Hong Kong’s adoption of IFRS, an alarmingly high rate of non compliance with HKAS 36 still exists among these goodwill-intensive firms, casting doubts over the hypothesis that lax compliance is a characteristic associated solely with early adoption.

Keywords: Goodwill, Impairment, IFRS, HKAS 36, Hong Kong

JEL Classification: M40, M41

Suggested Citation

Carlin, Tyrone M. and Finch, Nigel and Tran, Dzung Manh, IFRS Compliance in the Year of the Pig: The Practice of Goodwill Impairment Testing Among Large Hong Kong Firms During 2007 (February 14, 2010). Available at SSRN: https://ssrn.com/abstract=1552703 or http://dx.doi.org/10.2139/ssrn.1552703

Tyrone M. Carlin

Southern Cross University ( email )

Lismore, New South Wales 2480
Australia

The University of Sydney Business School ( email )

Cnr. of Codrington and Rose Streets
Sydney, NSW 2006
Australia
+ 61 2 9036 7230 (Phone)
+61 2 9351 7471 (Fax)

HOME PAGE: http://sydney.edu.au/business/staff/tyronec

Nigel Finch (Contact Author)

Saki Partners ( email )

Australia

Dzung Manh Tran

affiliation not provided to SSRN ( email )

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