Theoretical And Empirical Study On Accounting For Assets Impairment

The Accounting Standards for Business Enterprises(ASBE,2006) as a whole set of accounting standards was put into effect on January 1^st 2007 in China,although which realized the substantial convergence with International Financial Reporting Standards(IFRS),but an important difference in asset impairment treatment is still left.Comparing with the IFRS,The requirement is that company can't reverse long-lived asset impairment provision once the impairment is recognized.This mandatory regulation is mainly considered that impairment of long-term assets such as fixed assets,intangible assets,long-term equity investment belongs permanent impairment and can't reversed easily.On the other hand,this regulation is propitious to restrain corporation using impairment provision and reversal to do earning management.Based on the implementation of the ASBE and theoretical analysis,this paper is to detect long-term asset impairment behavior of listed companies for having the evidence whether the ASBE achieves its original mission.In this study,we found that long-term asset impairment provision behavior is significantly influenced by the earnings management motivation of listed companies. There is significant evidence that the companies suffering great amount of loss in year 2004 and 2007 recognized impairment loss remarkably;and the companies that suffered consecutive periods of losses tended to inflate their earnings by exploiting the assets impairment accounting standards;and the characteristic variables of corporate governance structure such as shareholding proportion of majority shareholder measuring concentration of ownership,state-owned holding or not,the position of board chairmanship and general manager position belong to one person or not,etc.significantly influence the long-term asset impairment provision behavior. The results showed that long-term asset impairment provision behavior is significantly influenced by the control variable of Year.Since 2005,long-term asset impairment provision behavior of listed companies tended to be more careful and conservative;it also showed that to some extent standards-setter had achieved its original mission.