| Summary: | 碩士 === 朝陽科技大學 === 會計所 === 97 === Since asset impairment has been brought into practice in Taiwan from 2004, most past researches had only focused on market reaction of asset impairment, company features, motivation, and adoption timing. However, few of studies discussed issues of asset impairment reversing. As a result, this study integrating asset impairment recognized and its reversing comprehensively then examines the effect of strategic earning management induced from subjective judgment and discretionary space allowed in Statement of Financial Accounting Standards No. 35 (SFAS 35).
Firstly, Koh (2003, 2007) examines the association between institutional investors’ characteristics and earnings management. This study expands the concept of Kho (2007) and further divides institutional investors into two types, i.e., long term stakeholding and short term stakeholding, and investigates the roles that different types of holding stake of institutional investors play on companies’ asset impairment and following reversing unrealized gain occurred. Secondly, prior studies reveal the direct relationship between corporate governance system and strategic accounting report. It is worthy to discuss the relationship among variables of corporate governance, asset impairment and reversing earnings occurred afterward when the recognition of asset impairment is part of company’s strategic accounting report. In summary, this study examines the association between institutional investors and corporate governance and discusses the effects of recognition of asset impairment and reversing unrealized gain occurred.
The empirical results show that taking big bath and income smoothing are significantly associated with asset impairment, yet there is no significant influences on the reversing unrealized gain. Further, incorporating institutional investors into discussion of firm’s strategic earnings management shows no significant relationship between type of institutional investors and strategic earnings management. However, long term or short term institutional investors is positive relationship with asset impairment recognized. Therefore, this study infers that institutional investors who expect to maximize earnings will support firm’s strategic earnings management. Although it is not significant in subsequent reversing unrealized gain, the sign of the long term institutional investors conforms to the hypothesis conjecture. Finally, in view of corporate governance, this study finds that superior corporate governance indeed restrains earnings management of asset impairment. Under the model of reversing asset impairment, there is partially support with income smoothing. However, in the circumstance of taking a big bath, the same positive reaction presented with income smoothing. These results demonstrate the companies’ actual reaction to asset impairment reversing under the superior corporate governance.
|
|---|
