Asset Write-offs: An Empirical Investigation of Timeliness

Abstract

Anecdotal evidence shows that managers have plenty of discretion to manage the timing of write-offs to take action related to earnings management. In this paper, I examine whether write-offs are recorded in a timely manner. In particular, I investigate the association between asset write-offs and the market return over a long window as a metric of testing the timeliness of write offs. The results suggest that write-offs are recorded in a less timely manner than other components of earnings.