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A comparative analysis of goodwill impairment in two ASEAN countries with different economic development


Abdul Majid, Jamaliah (2016) A comparative analysis of goodwill impairment in two ASEAN countries with different economic development. In: 1st International Conference on Social and Economic Development 2016 (ICSED2016), 1-3 November 2016, Universiti Malaysia Terengganu (UMT).

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Abstract

This study compares motives and constraints to the recognition choice related to reporting zero goodwill impairment of Malaysian listed firms with those of Singaporean listed firms from 2010 to 2012. Using a binary logistic regression, results reveal important differences with regards to potential drivers and constraints to the recognition choice by listed companies between the two ASEAN countries. The Singaporean results appear to suggest that the recognition choice related to reporting zero goodwill impairment is driven by the desire to avoid debt covenant violation, whereas a high ratio of independent directors on the audit committee appears to restraint such recognition choice. Conversely, the Malaysian results seem to suggest that firms chose to exercise the recognition choice when the relative size of goodwill is small. However, the length of the CEO tenure appear to lessen such recognition choice. The findings of this study contributes to the literature on IFRS and accounting harmonization by supporting the view that having similar accounting standards may not necessarily imply that the financial statements of listed firms in the two countries are entirely comparable. Other factors, in particular, firms’ reporting incentives and the effectiveness of corporate governance mechanisms play important roles in influencing the financial statement comparability. The study also provides important implications for policy makers and relevant authorities, in that, to improve the comparability of the financial statements in the two ASEAN countries, the relevant authorities need to closely monitor firms’ reporting incentives and further strengthen the corporate governance mechanisms.

Item Type: Conference or Workshop Item (Paper)
Additional Information: e-ISBN: 978-967-0962-58-0 ORGANISER: SCHOOL OF SOCIAL AND ECONOMIC DEVELOPMENT UNIVERSITI MALAYSIA TERENGGANU CO-ORGANISER: BAIT AL-AMANAH
Uncontrolled Keywords: IFRS, Recognition choice, Accounting harmonization, ASEAN countries, Goodwill impairment
Subjects: H Social Sciences > HC Economic History and Conditions
Divisions: Tunku Puteri Intan Safinaz School of Accountancy (TISSA)
Depositing User: Mrs. Norazmilah Yaakub
Date Deposited: 12 Dec 2018 06:30
Last Modified: 12 Dec 2018 06:30
URI: http://repo.uum.edu.my/id/eprint/25305

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