Abstract
Based on the proxy theory, information asymmetry theory and signal transmission theory, this paper empirically tests the impact of executive changes on goodwill impairment. It uses the data of A-share listed companies in Shanghai and Shenzhen stock exchanges from 2010-2018 as samples. The research results show that: 1) Compared with companies that have not undergone executive changes, companies that have undergone executive changes have a greater degree of goodwill impairment; 2) The positive correlation between executive changes and goodwill impairment is only manifested in the companies audited by “non-Big Four”, which implies that high audit quality can effectively play an external monitoring role and curb the opportunistic behavior of senior management.
Highlights
The new accounting standards provide for an impairment test for subsequent measurement of goodwill, which is consistent with US and international accounting standards, and aims to increase the information content of goodwill
The research results show that: 1) Compared with companies that have not undergone executive changes, companies that have undergone executive changes have a greater degree of goodwill impairment; 2) The positive correlation between executive changes and goodwill impairment is only manifested in the companies audited by “non-Big Four”, which implies that high audit quality can effectively play an external monitoring role and curb the opportunistic behavior of senior management
Based on the agency theory, information asymmetry theory, and signal transmission theory, this article is empirically testing the relationship between changes in executives and impairment of goodwill, focusing on the following empirical tests: 1) Whether a company with executive changes has a greater impairment of goodwill than a company without executive changes? 2) Whether the effect of changes in executive changes on accruals of goodwill impairment is different under different audit quality
Summary
The new accounting standards provide for an impairment test for subsequent measurement of goodwill, which is consistent with US and international accounting standards, and aims to increase the information content of goodwill. The substantial overestimation of the value of the acquired company causes the probability of impairment of the goodwill of the main and the company to increase year by year, so that the economic consequences of the impairment of goodwill are prominent. The increasing risk of goodwill and subsequent goodwill impairment has aroused the concern of scholars. Based on the agency theory, information asymmetry theory, and signal transmission theory, this article is empirically testing the relationship between changes in executives and impairment of goodwill, focusing on the following empirical tests: 1) Whether a company with executive changes has a greater impairment of goodwill than a company without executive changes? Based on the agency theory, information asymmetry theory, and signal transmission theory, this article is empirically testing the relationship between changes in executives and impairment of goodwill, focusing on the following empirical tests: 1) Whether a company with executive changes has a greater impairment of goodwill than a company without executive changes? 2) Whether the effect of changes in executive changes on accruals of goodwill impairment is different under different audit quality
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