Do firms manage fair value estimates? An examination of SFAS 142 goodwill impairments

Research output: Contribution to journalArticleScientificpeer-review


Research units

  • University of Oulu


I find that goodwill write-offs under Statement of Financial Accounting Standards No. 142 (SFAS 142) are associated with future expected cash flows as mandated by the standard. However, there are indications that goodwill write-offs lag behind the economic impairment of goodwill. Additional analysis reveals that the association between goodwill write-offs and future cash flows is insignificant for firms with contemporaneous restructuring. I hypothesize that this finding is due to agency-based motives. Finally, I examine a sample of non-impairment firms in which there are indications that goodwill is impaired. I fail to find convincing evidence that these firms are opportunistically avoiding impairments.


Original languageEnglish
Pages (from-to)1059-1086
Number of pages28
JournalJournal of Business Finance and Accounting
Issue number9-10
Publication statusPublished - 1 Nov 2009
MoE publication typeA1 Journal article-refereed

    Research areas

  • Accounting conservatism, Fair value accounting, Write-offs

ID: 27838639