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

See all articles by Samir Vanza

Samir Vanza

University of Technology Sydney (UTS)

Peter Alfred Wells

University of Technology Sydney, Accounting Discipline Group ; Financial Research Network (FIRN)

Anna Wright

University of Technology Sydney (UTS); Financial Research Network (FIRN)

Date Written: March 28, 2011

Abstract

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

Vanza, Samir and Wells, Peter Alfred and Wright, Anna, Do Asset Impairments and the Associated Disclosures Resolve Uncertainty About Future Returns and Reduce Information Asymmetry (March 28, 2011). Journal of Contemporary Accounting and Economics 14 (2018) 22-40, Available at SSRN: https://ssrn.com/abstract=1798168 or http://dx.doi.org/10.2139/ssrn.1798168

Samir Vanza

University of Technology Sydney (UTS) ( email )

15 Broadway, Ultimo
PO Box 123
Sydney, NSW 2007
Australia

Peter Alfred Wells (Contact Author)

University of Technology Sydney, Accounting Discipline Group ( email )

P.O. Box 123
Broadway NSW 2007
Australia
+61 (02) 9514 3628 / 3629 (Phone)
+61 (02) 9514 5515 (Fax)

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

Anna Wright

University of Technology Sydney (UTS) ( email )

15 Broadway, Ultimo
PO Box 123
Sydney
Australia

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

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