| Summary: | 碩士 === 淡江大學 === 會計學系碩士班 === 97 === In June 2001, the Financial Accounting Standard Board (FASB) issued Statement of Financial Accounting Standard (SFAS) No. 142, “Goodwill and Other Intangible Assets.” Under SFAS No. 142, goodwill and intangible assets with indefinite useful lives are not amortized, but instead are tested for impairment at least annually. SFAS No. 142 gives the management more discretionary power to record assets impairment. Therefore, asset write-offs appear to be used as an earnings management tool should firms have the intent to do so. This study starts the empirical analyses by examining whether the incentives determine the magnitude of SFAS No. 142 assets impairment. The results reveal that firms that are close to violate their debt covenants tend to record a smaller amount of SFAS No. 142 write-offs and that firms with “big bath”, smoothing incentives, and a change in senior management are more likely to record SFAS No. 142 write-offs. In addition, this paper investigates the association between SFAS No. 142 write-offs and discretionary accruals, given that both earnings management tools may be used jointly reduce earnings. The results document that SFAS No. 142 write-offs and discretionary accruals are endogenous. Specifically, firms with favorable earnings performance tend to manage the earnings downward by recording larger asset write-offs and income-reducing discretionary accruals.
|
|---|
