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Swedish firms' untimely financial reporting: A study of goodwill impairment as a tool used to mislead financial users
Uppsala University, Disciplinary Domain of Humanities and Social Sciences, Faculty of Social Sciences, Department of Business Studies.
Uppsala University, Disciplinary Domain of Humanities and Social Sciences, Faculty of Social Sciences, Department of Business Studies.
2019 (English)Independent thesis Advanced level (degree of Master (Two Years)), 20 credits / 30 HE creditsStudent thesis
Abstract [en]

The transition to the IFRS framework has contributed to changes in the handling of goodwill. The yearly impairment test has contributed with subjectivity in the measurements resulting in fewer but larger impairments. The purpose of the study is to investigate how postponement of goodwill impairment is conducted and if managers thereby contribute to a distortion of the underlying qualitative characteristics in financial reporting. Proxies for earnings management activities, through cash flow manipulation, are computed cross-sectionally by sector-year with at least ten observations. Suspect firms are then matched with control firms within the same sector and operating year to control for these effects. The study consists of quantitative secondary data collected from Thomson Reuters Eikon. The data consists of 1090 observations covering seven years of Swedish listed firms with goodwill in their balance sheet. The study concludes that suspect firms experience abnormal current free cash flows compared to control firms, which indicate managers manipulating cash flows in order to postpone goodwill impairment. Also, growth opportunities and analysts' coverage have a significant impact on earnings management activities. 

Place, publisher, year, edition, pages
2019. , p. 48
Keywords [en]
Earnings management, Real activities management, Cash flow manipulation, Untimely reporting, Goodwill impairment
National Category
Business Administration
Identifiers
URN: urn:nbn:se:uu:diva-386284OAI: oai:DiVA.org:uu-386284DiVA, id: diva2:1327282
Subject / course
Business Studies
Educational program
Master Programme in Accounting, Auditing and Analysis
Supervisors
Examiners
Available from: 2019-06-20 Created: 2019-06-19 Last updated: 2019-06-20Bibliographically approved

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CiteExportLink to record
Permanent link

Direct link
Cite
Citation style
  • apa
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf