RIEB Discussion Paper Series No.2026-05

Title

National Institutions, Transparency and Accounting for Goodwill:Impairment Recognition under IFRS in Europe

Abstract

We investigate how national institutions impacting accounting transparency norms may influence accounting practices, with particular reference to the use of management discretion, in the context of a global accounting standards setting regime. Specifically, we examine whether national institutions impacting on accounting transparency have a persistent influence on goodwill impairment recognition decisions in Europe following the implementation of International Financial Reporting Standards (IFRS). Using a sample of 870 firm-year observations from 13 European countries during 2007 to 2014, including the global financial crisis period, we find that firms in countries with strong equity financing, a common law tradition and higher culturally derived transparency values are more likely to recognize goodwill impairment losses. We also find some evidence that national institutions impacting accounting transparency norms persistently influence goodwill impairment practices under IFRS during the global financial crisis period similar to non-crisis periods.

Keywords

Accounting transparency; National institution; Accounting for goodwill; Goodwill impairment; IFRS

Inquiries

Keishi FUJIYAMA
Research Institute for Economics and Business Administration,
Kobe University
Rokkodai-cho, Nada-ku, Kobe
657-8501 Japan
Phone: +81-78-803-7036
FAX: +81-78-803-7059

Sidney J. GRAY
University of Sydney Business School