Research Article Open Access

DETECTING ASSET IMPAIRMENT EARNINGS MANAGEMENT ON IFRS CONTEXT: SOME EVIDENCE FROM GREEK LISTED COMPANIES

Ekaterini C. Laskaridou1, Vazakidis Athanasios1 and Athianos Stergios2
  • 1 Department of Applied Informatics, University of Macedonia, Thessaloniki, Greece
  • 2 Department of Financial Accounting, T.E.I of Kentriki Macedonia, Serres, Greece

Abstract

The purpose of this study is two fold: (a) to bring on issues of asset impairment manipulation in the IFRS context (b) to examine, any statistical inference validating impairment discretionary charges and firms’ earning experience. The Impairment Accounting Standard (IAS 36), enters new requirements for asset impairment provided to satisfying accrued loss amounts. Earning Management through the use of asset impairments within constrains of taking accounting process results to income manipulation representing (a) an external demand to meet earnings forecasts (b) internal demand for communicating board’ level performance. We expect to present a critical view of the earnings discretion and provide an answer on the prevailing content of asset impairment. The sample constituted of 236 firms, listed in the Greek Stock Exchange Market on the basis of impairment observations. We analyze the earnings levels for impairer companies, for 2004-2012 years. Findings suggest (a) firms recording impairment charges possess lower earnings than do their counterparts not recording write downs and (b) the impairment losses are likely reported as timely opportunity to taking "big bath" and increasing future earnings. However we estimate that Greek firms’ operating performance is engaged to earning adjustments on (a) taxable environment and (b) new accounting rules liable to income strategies."

American Journal of Applied Sciences
Volume 11 No. 6, 2014, 963-968

DOI: https://doi.org/10.3844/ajassp.2014.963.968

Submitted On: 14 January 2014 Published On: 10 April 2014

How to Cite: Laskaridou, E. C., Athanasios, V. & Stergios, A. (2014). DETECTING ASSET IMPAIRMENT EARNINGS MANAGEMENT ON IFRS CONTEXT: SOME EVIDENCE FROM GREEK LISTED COMPANIES. American Journal of Applied Sciences, 11(6), 963-968. https://doi.org/10.3844/ajassp.2014.963.968

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Keywords

  • Earnings Management Impairment Accounting
  • IFRS
  • IAS