Markedsreaktioner på regnskabsmæssige nedskrivninger efter IAS 36: En undersøgelse af værdirelevans og informationsindhold af nedskrivninger efter IAS 36

Maria Birkedal Foged & Filip Asmussen

Student thesis: Master thesis

Abstract

In this thesis we investigate the value relevance and information content of reported IAS 36 impairment losses to the Danish capital marked during 2008-2012. First, we account for the current rules for the accounting treatment of impairment of assets as set out in IAS 36. According to the current rules, an impairment test of assets is to be performed when there is an indication of impairment. The performance of an impairment test involves significant accounting estimates over future cash flows. The impairment test may result in the recognition of significant impairment losses in the financial statements. We investigate the value relevance of reported impairment losses by means of regression analysis. We apply both price and returns regressions. We find a significant and negative association between reported impairment losses and stock prices and stock returns. Furthermore, we find that these results are driven by a few individual observations. When excluding outliners, we do not find a significant and negative association between reported impairment losses and stock prices or stock returns. We investigate the information content of reported goodwill impairment losses by means of an event study, in which we analyze the development in abnormal returns in a window of five days surrounding the announcement of impairment losses. We find abnormal returns of firms reporting impairment losses to be significantly negative compared to the stock marked as a whole. Furthermore, we find that these results are driven by a few individual observations. When excluding outliners, we do not find significant negative abnormal returns. To complement our event study, we perform a long-term study of abnormal returns in the period preceding the announcement of impairment losses. We find significant abnormal returns for firms reporting impairment losses up to ten quarters before the announcement date. Our results indicate that the marked recognize an impaired firm value prior to the recognition of impairment losses in the financial statements.

EducationsMSc in Auditing, (Graduate Programme) Final Thesis
LanguageDanish
Publication date2013
Number of pages177