Why reduce profit? Accounting choice of impairments in Swedish listed corporations
by Pernilla Broberg, Sven-Olof Yrjo Collin, Torbjorn Tagesson, Monika Axelsson, Charlotta Schele
International Journal of Accounting and Finance (IJAF), Vol. 3, No. 1, 2011

Abstract: Positive accounting theory and institutional theory are used in conjunction in order to explain accounting choice. The theory is applied on IAS 36 (impairment of assets), and tested on a sample of listed Swedish corporations. We find that the choice is mainly induced by agency and general business factors and to a slighter degree by institutional factors. Especially, we find that institutional influence will be stronger when it is in the interest of important stakeholders; that impairments can be used as a mean of signalling trust to absent owners and that the institutional element of tradition cannot be tested separately from the agency element of opportunism.

Online publication date: Tue, 21-Oct-2014

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