The Association between Goodwill Impairment Loss and Goodwill Impairment Test-Related Disclosures in Australia

32 Pages Posted: 19 Jan 2017

See all articles by Humayun Kabir

Humayun Kabir

Auckland University of Technology

Asheq Rahman

Auckland University of Technology - Faculty of Business & Law

Li Su

Auckland University of Technology

Date Written: January 18, 2017

Abstract

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

Kabir, Humayun and Rahman, Asheq and Su, Li, The Association between Goodwill Impairment Loss and Goodwill Impairment Test-Related Disclosures in Australia (January 18, 2017). 8th Conference on Financial Markets and Corporate Governance (FMCG) 2017. Available at SSRN: https://ssrn.com/abstract=2901397 or http://dx.doi.org/10.2139/ssrn.2901397

Humayun Kabir (Contact Author)

Auckland University of Technology ( email )

AUT City Campus
Private Bag 92006
Auckland, 1142
New Zealand
+64 21 08309355 (Phone)

Asheq Rahman

Auckland University of Technology - Faculty of Business & Law ( email )

3 Wakefield Street
Private Bag 92006
Auckland Central 1020
New Zealand

Li Su

Auckland University of Technology

AUT City Campus
Private Bag 92006
Auckland, 1142
New Zealand

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