IDEAS home Printed from https://ideas.repec.org/a/eee/finlet/v58y2023ipds1544612323009996.html
   My bibliography  Save this article

Corporate governance, financial indicators and asset impairments during the COVID-19 pandemic period

Author

Listed:
  • Vichitsarawong, Thanyaluk
  • Eng, Li Li

Abstract

This study examines the effect of corporate governance and financial indicators on long-lived asset and goodwill impairments during pre-COVID-19 and COVID-19 periods for a sample of United States (U.S.), France, Germany and the United Kingdom (U.K.). We find that goodwill impairment is greater during the COVID-19 than the pre-COVID-19 periods for all four countries, and long-lived asset impairment is greater during the COVID-19 period for the U.S. and the U.K. The effects of corporate governance on asset impairments and the effects of short-term financial indicators (cash flow and/or sales) and long-term financial indicators (stock returns) vary by country.

Suggested Citation

  • Vichitsarawong, Thanyaluk & Eng, Li Li, 2023. "Corporate governance, financial indicators and asset impairments during the COVID-19 pandemic period," Finance Research Letters, Elsevier, vol. 58(PD).
    • Handle: RePEc:eee:finlet:v:58:y:2023:i:pd:s1544612323009996
    DOI: 10.1016/j.frl.2023.104627
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1544612323009996
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.frl.2023.104627?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Ramanna, Karthik, 2008. "The implications of unverifiable fair-value accounting: Evidence from the political economy of goodwill accounting," Journal of Accounting and Economics, Elsevier, vol. 45(2-3), pages 253-281, August.
    2. Dushyantkumar Vyas, 2011. "The Timeliness of Accounting Write‐Downs by U.S. Financial Institutions During the Financial Crisis of 2007–2008," Journal of Accounting Research, Wiley Blackwell, vol. 49(3), pages 823-860, June.
    3. Jayne M. Godfrey & Ping‐Sheng Koh, 2009. "Goodwill impairment as a reflection of investment opportunities," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 49(1), pages 117-140, March.
    4. Mitchell A. Petersen, 2009. "Estimating Standard Errors in Finance Panel Data Sets: Comparing Approaches," The Review of Financial Studies, Society for Financial Studies, vol. 22(1), pages 435-480, January.
    5. Joshua L. Gunn & Inder K. Khurana & Sarah E. Stein, 2018. "Determinants and consequences of timely asset impairments during the financial crisis," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 45(1-2), pages 3-39, January.
    6. Rees, L & Gill, S & Gore, R, 1996. "An investigation of asset write-downs and concurrent abnormal accruals," Journal of Accounting Research, Wiley Blackwell, vol. 34, pages 157-169.
    7. Klein, April, 2002. "Audit committee, board of director characteristics, and earnings management," Journal of Accounting and Economics, Elsevier, vol. 33(3), pages 375-400, August.
    8. Paul André & Andrei Filip & Luc Paugam, 2016. "Examining the Patterns of Goodwill Impairments in Europe and the US," Accounting in Europe, Taylor & Francis Journals, vol. 13(3), pages 329-352, September.
    9. Bagna, Emanuel & Ramusino, Enrico Cotta & Ogliari, Matteo, 2023. "The impact of different goodwill accounting methods on stock prices: A comparison of amortization and impairment-only methodologies," International Review of Financial Analysis, Elsevier, vol. 85(C).
    10. Ball, Ray & Kothari, S. P. & Robin, Ashok, 2000. "The effect of international institutional factors on properties of accounting earnings," Journal of Accounting and Economics, Elsevier, vol. 29(1), pages 1-51, February.
    11. Broadstock, David C. & Chan, Kalok & Cheng, Louis T.W. & Wang, Xiaowei, 2021. "The role of ESG performance during times of financial crisis: Evidence from COVID-19 in China," Finance Research Letters, Elsevier, vol. 38(C).
    12. Ball, Ray & Robin, Ashok & Wu, Joanna Shuang, 2003. "Incentives versus standards: properties of accounting income in four East Asian countries," Journal of Accounting and Economics, Elsevier, vol. 36(1-3), pages 235-270, December.
    13. Kevin K. Li & Richard G. Sloan, 2017. "Has goodwill accounting gone bad?," Review of Accounting Studies, Springer, vol. 22(2), pages 964-1003, June.
    14. Kabir, Humayun & Rahman, Asheq, 2016. "The role of corporate governance in accounting discretion under IFRS: Goodwill impairment in Australia," Journal of Contemporary Accounting and Economics, Elsevier, vol. 12(3), pages 290-308.
    15. Andrei Filip & Thomas Jeanjean & Luc Paugam, 2015. "Using Real Activities to Avoid Goodwill Impairment Losses: Evidence and Effect on Future Performance," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 42(3-4), pages 515-554, April.
    16. Martin Bugeja & Natalie Gallery, 2006. "Is older goodwill value relevant?," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 46(4), pages 519-535, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Tadeusz Dudycz & Jadwiga Praźników, 2020. "Does the Mark-to-Model Fair Value Measure Make Assets Impairment Noisy?: A Literature Review," Sustainability, MDPI, vol. 12(4), pages 1-24, February.
    2. Guermazi, Walid & Halioui, Khamoussi, 2020. "Do differences in national cultures affect cross-country conditional conservatism behavior under IFRS?," Research in International Business and Finance, Elsevier, vol. 52(C).
    3. Andrei Filip & Gerald J. Lobo & Luc Paugam, 2021. "Managerial discretion to delay the recognition of goodwill impairment: The role of enforcement," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 48(1-2), pages 36-69, January.
    4. Alshehabi, Ahmad & Georgiou, George & Ala, Alessandro S., 2021. "Country-specific drivers of the value relevance of goodwill impairment losses," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 43(C).
    5. Benjamin T. Albersmann & Reiner Quick, 2020. "The Impact of Audit Quality Indicators on the Timeliness of Goodwill Impairments: Evidence from the German Setting," Abacus, Accounting Foundation, University of Sydney, vol. 56(1), pages 66-103, March.
    6. Wolfgang Ballwieser, 2020. "International Valuation Standards (IVS) – Bedarf, Reichweite, Würdigung, diskutiert anhand der Bewertung von Unternehmen und Goodwill [International Valuation Standards (IVS)—Demand, Range, Critica," Schmalenbach Journal of Business Research, Springer, vol. 72(1), pages 71-94, March.
    7. Alain Schatt & Leonidas Doukakis & Corinne Bessieux-Ollier & Elisabeth Walliser, 2016. "Do Goodwill Impairments by European Firms Provide Useful Information to Investors?," Accounting in Europe, Taylor & Francis Journals, vol. 13(3), pages 307-327, September.
    8. DeFond, Mark L., 2010. "Earnings quality research: Advances, challenges and future research," Journal of Accounting and Economics, Elsevier, vol. 50(2-3), pages 402-409, December.
    9. Duh, Rong-Ruey & Lee, Wen-Chih & Lin, Ching-Chieh, 2009. "Reversing an impairment loss and earnings management: The role of corporate governance," The International Journal of Accounting, Elsevier, vol. 44(2), pages 113-137, June.
    10. Fangjun Wang & Zhichao Zhang & Luying Xu, 2020. "Corporate social responsibility and financial statement comparability: Evidence from China," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 27(3), pages 1375-1394, May.
    11. Karampinis, Nikolaos I., 2021. "A cross-national analysis on the impact of enforcement on impairments of tangible assets under IFRS," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 42(C).
    12. Iatridis, George Emmanuel & Pappas, Kostas & Walker, Martin, 2022. "Narrative disclosure quality and the timeliness of goodwill impairments," The British Accounting Review, Elsevier, vol. 54(2).
    13. Manganaris, Panayotis & Beccalli, Elena & Dimitropoulos, Panagiotis, 2017. "Bank transparency and the crisis," The British Accounting Review, Elsevier, vol. 49(2), pages 121-137.
    14. repec:hum:wpaper:sfb649dp2012-010 is not listed on IDEAS
    15. Takuya Iwasaki & Shota Otomasa & Atsushi Shiiba & Akinobu Shuto, 2012. "The role of accounting conservatism in executive compensation contracts (Forthcoming in Journal of Business Finance and Accounting)," CARF F-Series CARF-F-370, Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo, revised Jul 2018.
    16. Karampinis, Nikolaos I. & Hevas, Dimosthenis L., 2011. "Mandating IFRS in an Unfavorable Environment: The Greek Experience," The International Journal of Accounting, Elsevier, vol. 46(3), pages 304-332, September.
    17. Dea¡¯a Al-Deen Omar Al-Sraheen & Faudziah Hanim Fadzil & Syed Soffian Bin Syed Ismail, 2014. "Does Corporate Governance Matter? Evidence from Accounting Conservatism Practices among Jordanian Listed Companies," International Journal of Learning and Development, Macrothink Institute, vol. 4(4), pages 64-80, December.
    18. Inès Bouden & Luc Paugam & Olivier J. Ramond, 2011. "Les déterminants de la dépréciation du goodwill : proposition d'un cadre d'analyse," Post-Print hal-00646810, HAL.
    19. Takuya Iwasaki & Shota Otomasa & Atsushi Shiiba & Akinobu Shuto, 2012. "Excess Executive Compensation and the Demand for Accounting Conservatism," Discussion Paper Series DP2012-08, Research Institute for Economics & Business Administration, Kobe University.
    20. Paul André & Andrei Filip & Luc Paugam, 2013. "Impact of Mandatory IFRS Adoption on Conditional Conservatism in Europe," Working Papers hal-00862683, HAL.
    21. Christensen, Hans B. & Hail, Luzi & Leuz, Christian, 2013. "Mandatory IFRS reporting and changes in enforcement," Journal of Accounting and Economics, Elsevier, vol. 56(2), pages 147-177.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:finlet:v:58:y:2023:i:pd:s1544612323009996. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/frl .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.