Detail publikace

The Adoption of IFRS 3: The Effects of Managerial Discretion and Stock Market Reactions

Autor: Jiří Novák M.Sc., Ph.D., Deloitte Corporate Chair, Hamberg, Mattias; Paananen, Mari
Typ: Články v impaktovaných časopisech
Rok: 2010
Číslo: 0
ISSN / ISBN:
Publikováno v: European Accounting Review
Místo vydání:
Klíčová slova:
JEL kódy:
Citace:
Granty: 402/09/P154 Měření finančního rizika pro hodnocení efektivity kapitálových trhů
Abstrakt: In recent years, several accounting standards, including IFRS 3, issued by the IASB, substitute historical cost with fair value measures and so provide managers with increased discretion to determine fair value without an actual market for the asset. Using Swedish data, we document the accounting consequences of the adoption of IFRS 3 and the stock market’s reaction. After the adoption of this standard in January 2005 the amount of capitalized goodwill increased substantially. Goodwill impairments under IFRS are considerably lower than goodwill amortizations and impairments made under Swedish GAAP. Consequently, the adoption of IFRS 3 increased reported earnings. An analysis of economic incentives influencing the impairment decision at the initial adoption of IFRS 3 shows that tenured management is negatively associated with the impairment decision. However, most firms did not reclassify goodwill or make additional impairments. Firms with substantial amounts of goodwill yielded abnormally high returns despite abnormally low earnings. Investors seem to, correctly or incorrectly, have viewed the accrual-based increase in earnings stemming from IFRS 3 as an indication of higher future cash flows.

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