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Goodwill impairment: an examination of chief executive officer tenure in Malaysia

Al-Hiyari, Ahmad and Abdul Latif, Rohaida and Amran, Noor Afza (2016) Goodwill impairment: an examination of chief executive officer tenure in Malaysia. Advanced Science Letters, 22 (5). pp. 1356-1359. ISSN 1936-6612

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Accounting for purchased goodwill has changed from amortisation to impairment approach.The standard setters argue that the impairment-only approach will better reflect the underlying economic attributes of goodwill.However, due to the great subjectivity involved in fair values estimate, the impairment approach is susceptible to manipulation. We examine the influence of chief executive officer (CEO) tenure on the amount of goodwill impairment for a sample of 727 companies listed on Bursa Malaysia from years 2011 to 2012. Our empirical results are contradictory to previous research findings that CEOs with shorter tenure are insignificantly associated with magnitude of goodwill impairment. Further analysis reveals that new CEOs are associated with a greater magnitude of impairments only when earnings are positive.The result is consistent with the premise of new CEOs involving in income smoothing, where the incentives to expense goodwill is greatest for profitable firms.

Item Type: Article
Uncontrolled Keywords: Accounting Discretion; CEO Tenure; Corporate Governance; Fair Value; Goodwill Impairment
Subjects: H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management
Divisions: Tunku Puteri Intan Safinaz School of Accountancy (TISSA)
Depositing User: Dr. Rohaida Abdul Latif
Date Deposited: 16 Nov 2016 02:03
Last Modified: 16 Nov 2016 02:03
URI: http://repo.uum.edu.my/id/eprint/19698

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