Managerial Ability, Financial Performance and Goodwill Impairment: A Moderated Mediation Analysis

29 Pages Posted: 5 Jun 2020

See all articles by Qiubin Huang

Qiubin Huang

University of Science and Technology Beijing - School of Economics and Management

Mengyuan Xiong

University of Science and Technology Beijing - Donlinks School of Economics and Management

Ming Xiao

University of Science and Technology Beijing

Date Written: May 11, 2020

Abstract

This paper examines whether and how managerial ability affects the likelihood of goodwill impairment of Chinese publicly listed companies over the period 2007-2017. We document a negative relationship between goodwill impairment and managerial ability, and uncover the mediation effect of corporate financial performance. Moreover, we find that the mediation effect is moderated by firms’ earnings smoothing motivation and state ownership. The results suggest that when a company has the motivation to smooth earnings or is owned by the government, higher managerial ability of the company does not necessarily reduce the likelihood of goodwill impairment. The findings have important implications for investors and regulators.

Keywords: Goodwill impairment, Managerial ability, Financial performance, Moderated mediation

JEL Classification: G32, G34, M41

Suggested Citation

Huang, Qiubin and Xiong, Mengyuan and Xiao, Ming, Managerial Ability, Financial Performance and Goodwill Impairment: A Moderated Mediation Analysis (May 11, 2020). Available at SSRN: https://ssrn.com/abstract=3597917 or http://dx.doi.org/10.2139/ssrn.3597917

Qiubin Huang (Contact Author)

University of Science and Technology Beijing - School of Economics and Management

30 Xueyuan Road, Haidian District
Beijing, 100083
China

Mengyuan Xiong

University of Science and Technology Beijing - Donlinks School of Economics and Management ( email )

30 Xueyuan Road, Haidian District
beijing, 100083
China

Ming Xiao

University of Science and Technology Beijing ( email )

30 Xueyuan Road, Haidian District
beijing, 100083
China
86-010-82375368 (Phone)

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