Int. J. of Accounting and Finance   »   2011 Vol.3, No.1

 

 

Title: Why reduce profit? Accounting choice of impairments in Swedish listed corporations

 

Author: Pernilla Broberg, Sven-Olof Yrjo Collin, Torbjorn Tagesson, Monika Axelsson, Charlotta Schele

 

Addresses:
School of Health and Society, Kristianstad University, SE-291 88 Kristianstad, Sweden; Department of Business Administration, Lund University, SE-220 07 Lund, Sweden.
School of Business and Economics, Linnæus University, SE-351 95 Vaxjo, Sweden.
Department of Business Administration, Lund University, SE-220 07 Lund, Sweden.
School of Health and Society, Kristianstad University, SE-291 88 Kristianstad, Sweden.
School of Health and Society, Kristianstad University, SE-291 88 Kristianstad, Sweden

 

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.

 

Keywords: accounting choice; asset impairment; positive accounting theory; institutional theory; Sweden; stakeholders; trust; absent owners; tradition; opportunism.

 

DOI: 10.1504/IJAF.2011.042220

 

Int. J. of Accounting and Finance, 2011 Vol.3, No.1, pp.49 - 71

 

Available online: 31 Aug 2011

 

 

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