The Association between Goodwill Impairment Loss and Goodwill Impairment Test-Related Disclosures in Australia
32 Pages Posted: 19 Jan 2017
Date Written: January 18, 2017
We examine the association between goodwill impairment loss and goodwill impairment test-related disclosures in Australia. Using an Australian sample of firm-years with goodwill during 2007-12, we find that firm-years with understated goodwill impairment loss have higher goodwill impairment test-related disclosures in notes and vice versa. This is consistent with goodwill firms using disclosures as a way of enhancing the credibility of the goodwill impairment loss number when it is understated. However, we find no evidence that the stock market prices this goodwill impairment loss-disclosures association.
Keywords: goodwill impairment, goodwill impairment test, disclosures, signalling
JEL Classification: G34, M41
Suggested Citation: Suggested Citation