Do Asset Impairments and the Associated Disclosures Resolve Uncertainty About Future Returns and Reduce Information Asymmetry
Journal of Contemporary Accounting and Economics 14 (2018) 22-40
53 Pages Posted: 31 Mar 2011 Last revised: 24 Feb 2018
Date Written: March 28, 2011
The objective of this study is to provide insights into how Australian listed firms are implementing AASB 136 Impairments of Assets. Our first concern is whether uncertainty about future returns and information asymmetry motivates the recognition of asset impairments. We find no evidence that the recognition of asset impairments is associated with higher uncertainty about future returns. Furthermore, we find no evidence that the recognition of asset impairments is associated with higher information asymmetry. Our second concern is whether asset impairments and the associated disclosures provide information that reduces uncertainty about future returns and information asymmetry. While we find some evidence that asset impairments are associated with decreases in information asymmetry before the financial crisis, during the financial crisis, asset impairments are associated with increases in both measurement uncertainty and information asymmetry.
Keywords: Asset impairment, Global Financial Crisis
JEL Classification: M41
Suggested Citation: Suggested Citation