(IR) Relevance of goodwill impairment: the case of European banking (2005–2015)

Sanchidrián, Jorge Pallarés; García, Javier Pérez; Angulo, José Antonio Gonzalo

doi:10.1057/s41261-020-00126-0

Cited by 4 publications

(2 citation statements)

References 18 publications

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“…There is therefore a clear "bath" effect just before the new accounting standard starts to be applied. The evidence of firms opportunistically managing goodwill impairment is in line with recent evidence by Filip et al (2021), Pallarés-Sanchidrián et al (2021, Xiao &Yang (2021), andGiner (2022), showing a delayed recognition of goodwill impairment (e.g., Albersmann & Quick, 2020) that is only corrected through 9 The value of the Hausman test obtained in the contrast between fixed effects (FE) and random effects (RE) was 93.61 with a p-value=0.0000. This leads to rejection of the null hypothesis that RE provides consistent estimates.…”

Section: Determinants Of Impairmentsupporting

confidence: 85%

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Back to goodwill amortisation and the financial performance of public and private firms in Spain

Peón,

Ruiz

2024

Rev. contab.

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We take advantage of the change in goodwill regulation in Spain after 2016, to contribute with a comprehensive analysis of a scenario barely studied in the recent literature: the inverse transition from goodwill impairment to the systematic amortisation of goodwill. Using a database with the individual financial statements of all Spanish non-financial firms, both listed and non-listed, with positive goodwill on balance, we contribute in two instances. On the one hand, we seek to obtain evidence of whether managers behaved opportunistically during the impairment regulation period using a test of the determinants of goodwill impairment recognition. On the other hand, through a differences-in-differences approach against a sample of 4,000 control firms, we test the differential impact of the change in regulation on the return on assets of those firms with goodwill in their balances. Our results are in line with extant research suggesting that the systematic amortisation of goodwill paired with a periodic impairment test limits earnings management practices and help investors assess the economic performance of a firm. Aprovechamos el cambio en la regulación del fondo de comercio en España a partir de 2016, para analizar un escenario escasamente estudiado en la literatura reciente: la transición inversa del deterioro del fondo de comercio a la amortización sistemática del mismo. Construyendo una base de datos a partir de los estados financieros individuales de todas las empresas no financieras españolas, cotizadas y no cotizadas, con fondo de comercio positivo en balance, contribuimos a la literatura en dos instancias. Por un lado, tratamos de obtener evidencia de si los gestores se comportaron de forma oportunista durante el periodo de regulación del deterioro mediante un test de los determinantes del reconocimiento del deterioro del fondo de comercio. Por otro lado, mediante un enfoque de diferencias en diferencias frente a una muestra de 4.000 empresas de control, comprobamos el impacto diferencial del cambio en la regulación sobre la rentabilidad de los activos de aquellas empresas con fondo de comercio en sus balances. Nuestros resultados concuerdan con las investigaciones existentes, que sugieren que la amortización sistemática del fondo de comercio, junto con una prueba periódica de deterioro, limitan las prácticas de gestión de beneficios y ayudan a los inversores a evaluar los resultados económicos de una empresa.

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Section: Determinants Of Impairmentsupporting

confidence: 85%

“…Since then, most academic literature has studied the introduction of impairment tests (e.g., André et al, 2015;Cheng et al, 2018;Pallarés-Sanchidrián et al, 2021). However, the debate lingers.…”

Section: Introductionmentioning

confidence: 99%

Back to goodwill amortisation and the financial performance of public and private firms in Spain

Peón,

Ruiz

2024

Rev. contab.

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Were the Crises of the Recent Past a Litmus Test for Goodwill in the Automotive Industry?

Canipa-Valdez,

Tettenborn,

Tettenborn

2023

Contributions to Finance and Accounting

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IFRS 9, earnings management and capital management by European banks

Norouzpour,

Nikulin,

Downing

2023

JFRA

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Purpose The purpose of this paper is to compare earnings management (EM) and capital management (CM) by European banks before and after the adoption of IFRS 9. After IFRS 9, banks have more discretion in recognizing loan-loss provisions than before IFRS 9. Hence, after IFRS 9, banks could use EM and CM to a greater extent. Design/methodology/approach This paper analyzes a sample of European banks and uses regression analysis. First, this paper examines whether EM and CM changed after IFRS 9 was adopted. Next, this study examines whether any changes in EM and CM under IFRS 9 depend on regulatory quality (RQ) in the country where banks are located. Findings This paper has three results. First, after IFRS 9, EM increased relative to before IFRS 9. Second, after IFRS 9, CM increased relative to before IFRS 9. Third, this increase in EM was only for banks in countries with low RQ – in countries with high RQ, this study finds no change in EM after IFRS 9. Altogether, these results suggest that, first, EM and CM increased after IFRS 9 and, second, this increase in EM depended on the RQ of a bank’s country. Originality/value This paper identifies how the adoption of IFRS 9 affected EM and CM by European banks. The main contribution of this paper is that it examines the impact of the adoption of IFRS 9 on EM and CM by European banks using data from banks’ actual financial statements.

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(IR) Relevance of goodwill impairment: the case of European banking (2005–2015)

Cited by 4 publications

References 18 publications

Back to goodwill amortisation and the financial performance of public and private firms in Spain

Back to goodwill amortisation and the financial performance of public and private firms in Spain

Were the Crises of the Recent Past a Litmus Test for Goodwill in the Automotive Industry?

IFRS 9, earnings management and capital management by European banks

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