Do Economic Performance Indicators Support Firms' Claiming a Goodwill Impairment Loss During a Prosperous Year?
31 Pages Posted: 18 Jan 2019 Last revised: 10 Mar 2019
Date Written: January 16, 2019
Gaps exist in the goodwill accounting literature stream regarding the informativeness of goodwill impairment losses. On the one hand, researchers find goodwill impairment losses improve earnings’ predictability of cash flows and stock returns. On the other hand, goodwill impairment losses have been linked to opportunistic management behavior. This study fills a gap in the literature by examining firms’ goodwill impairment losses during 2006, a prosperous year. Results do not overwhelmingly support the informative role of goodwill accounting.
Keywords: goodwill, impairment, earnings management
JEL Classification: M41
Suggested Citation: Suggested Citation