Impairment estimates for available-for-sale equity instruments under IFRS: evidence from italian Banks

By | 2017-12-27T14:07:55+01:00 December 27th, 2017|

Sannino Giuseppe, Ginesti Gianluca, Drago Carlo/Financial ReportingRiviste / Fascicolo: 2-2014

Literature indicates that accounting choices under a given set of standards is an important topic due to the different economic implications. Daske et al. (2013) suggest that firms have substantial discretion in applying IFRS. Despite the implications on how the firms apply IFRS have motivated many studies, to our knowledge, little is known about the impairment estimates for the Available-for- Sale (AfS) equity instruments. Using a sample of Italian banks over the period 2010-2011, we investigate the determinants of the accounting decisions for impairment estimates. We find that the reporting quality and profitability are explanatory factors of the banks’ decisions to modify the thresholds of the impairment indicators used to assess AfS equity instruments. Our study also suggests that banks use a substantial discretion in implementing the IAS 39 for the AfS equity instruments.

Keywords: Financial instruments, IAS/IFRS, accounting choices, impairment, financial reporting.



Why Do Firms Write Off Their Goodwill? A Comparison of Different Accounting Systems

By | 2017-12-22T14:50:30+01:00 December 22nd, 2017|

Avallone Francesco, Gabbioneta Claudia, Ramassa Paola, Sorrentino Marco/ Financial ReportingRiviste /Fascicolo: 1-2015

Increased comparability of financial statements across adopting countries is one of the main objectives of IFRS adoption. The level of achievement of this objective, however, is still debatable. While some studies have documented that crosscountry comparability of financial statements has increased after IFRS adoption, other studies have found that comparability has actually decreased since 2005. We contribute to this debate by studying whether the motivations for goodwill writeoff are the same or vary across countries with different accounting systems. Although a good deal of research has investigated the motivations for goodwill writeoff, our study is the first to analyze whether these motivations vary across countries with different accounting systems. We find that firms that expect low cash flows in the future are more likely to report goodwill write-offs if they are located in countries with an Anglo-Saxon accounting system than if they are located in countries with a Continental accounting system. These results suggest that IFRS are “interpreted” differently in different countries and that harmonization of financial statements has not been fully achieved yet.

Keywords: Goodwill, impairment, IFRS, accounting systems

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