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The Timing of Goodwill Write-off: Cases of Initial Overpayment

Author

Listed:
  • Jamaliah Abdul Majid
  • Robiah Abu Bakar
  • Nor Asma Lode

Abstract

This paper explores types of accounting choice related to reporting goodwill impairment losses, if any, exercised by Malaysian listed firms after an implementation of IFRS 3. The study is carried out through an in-depth analysis of annual reports for fifteen firms over a number of years. The fifteen firms selected are those that have goodwill arising from business combinations in December 2006/7, reported goodwill impairment losses in the current year or the future year(s), and the goodwill represents 50% or more of the acquisition price. Results show that of the fifteen firms examined, eight firms appeared to exercise the accounting choice in the form of opportunistic timing in reporting the impairment losses. The study contributes to the accounting choice literature by providing evidence on the timing of goodwill impairment losses for goodwill that arose from an apparent overpayment made at the time of an acquisition of a subsidiary.

Suggested Citation

  • Jamaliah Abdul Majid & Robiah Abu Bakar & Nor Asma Lode, 2016. "The Timing of Goodwill Write-off: Cases of Initial Overpayment," International Business Research, Canadian Center of Science and Education, vol. 9(11), pages 65-69, November.
    • Handle: RePEc:ibn:ibrjnl:v:9:y:2016:i:11:p:65-69
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    References listed on IDEAS

    as
    1. Francis, Jennifer, 2001. "Discussion of empirical research on accounting choice," Journal of Accounting and Economics, Elsevier, vol. 31(1-3), pages 309-319, September.
    2. Abdul Majid, Jamaliah, 2015. "Reporting incentives, ownership concentration by the largest outside shareholder, and reported goodwill impairment losses," Journal of Contemporary Accounting and Economics, Elsevier, vol. 11(3), pages 199-214.
    3. Erlend Kvaal & Christopher Nobes, 2010. "International differences in IFRS policy choice: A research note," Accounting and Business Research, Taylor & Francis Journals, vol. 40(2), pages 173-187.
    4. Fields, Thomas D. & Lys, Thomas Z. & Vincent, Linda, 2001. "Empirical research on accounting choice," Journal of Accounting and Economics, Elsevier, vol. 31(1-3), pages 255-307, September.
    5. Francis, J & Hanna, JD & Vincent, L, 1996. "Causes and effects of discretionary asset write-offs," Journal of Accounting Research, Wiley Blackwell, vol. 34, pages 117-134.
    6. Kaiying Ji, 2013. "Better Late than Never, the Timing of Goodwill Impairment Testing in Australia," Australian Accounting Review, CPA Australia, vol. 23(4), pages 369-379, December.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    opportunistic reporting; accounting choice; goodwill impairment; business combinations; acquisitions;
    All these keywords.

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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