Determinants of mandatory goodwill disclosure: The case of impairment testing in Germany
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In: International Journal of Managerial and Financial Accounting, Vol. 10, No. 4, 2018, p. 301-330.
Research output: Journal contributions › Journal articles › Research › peer-review
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TY - JOUR
T1 - Determinants of mandatory goodwill disclosure
T2 - The case of impairment testing in Germany
AU - Lazar, Laurent
AU - Velte, Patrick
PY - 2018
Y1 - 2018
N2 - Goodwill accounting standards, according to International Financial Reporting Standard 3 (IFRS 3) and International Accounting Standard 36 (IAS 36), oblige firms to describe the circumstances that form the basis of the annual impairment testing. We observe that managers’ interpretation and application of the IFRS is associated with the information content disclosed in financial statements. The use of boilerplate instead of firm-specific information decreases the information quality. This study investigates the disclosure quality of goodwill impairment testing according to IFRS of German listed companies between 2010 and 2015. Our results provide evidence that firm performance and goodwill impairment losses are positively linked to the quality of goodwill impairment disclosure. Furthermore, the results show that the magnitude of reported goodwill is negatively associated with the disclosure quality. Our findings are robust to additional tests and make several contributions to further research, regulation, and practice.
AB - Goodwill accounting standards, according to International Financial Reporting Standard 3 (IFRS 3) and International Accounting Standard 36 (IAS 36), oblige firms to describe the circumstances that form the basis of the annual impairment testing. We observe that managers’ interpretation and application of the IFRS is associated with the information content disclosed in financial statements. The use of boilerplate instead of firm-specific information decreases the information quality. This study investigates the disclosure quality of goodwill impairment testing according to IFRS of German listed companies between 2010 and 2015. Our results provide evidence that firm performance and goodwill impairment losses are positively linked to the quality of goodwill impairment disclosure. Furthermore, the results show that the magnitude of reported goodwill is negatively associated with the disclosure quality. Our findings are robust to additional tests and make several contributions to further research, regulation, and practice.
KW - Management studies
KW - Disclosure quality
KW - Germany
KW - Goodwill
KW - IAS 36
KW - Impairment only approach
KW - International Accounting Standard 36
KW - IOA
UR - http://www.scopus.com/inward/record.url?scp=85056372755&partnerID=8YFLogxK
U2 - 10.1504/IJMFA.2018.095941
DO - 10.1504/IJMFA.2018.095941
M3 - Journal articles
VL - 10
SP - 301
EP - 330
JO - International Journal of Managerial and Financial Accounting
JF - International Journal of Managerial and Financial Accounting
SN - 1753-6723
SN - 1753-6723
IS - 4
ER -