1. bookVolume 22 (2022): Edizione 1 (June 2022)
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License
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Rivista
eISSN
1898-0198
Prima pubblicazione
06 May 2008
Frequenza di pubblicazione
2 volte all'anno
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Inglese
access type Accesso libero

Intangible Assets, Goodwill and Earnings Management: Evidence from France and the Uk

Pubblicato online: 18 Jun 2022
Volume & Edizione: Volume 22 (2022) - Edizione 1 (June 2022)
Pagine: 111 - 129
Ricevuto: 14 Dec 2021
Accettato: 30 Mar 2022
Dettagli della rivista
License
Formato
Rivista
eISSN
1898-0198
Prima pubblicazione
06 May 2008
Frequenza di pubblicazione
2 volte all'anno
Lingue
Inglese
Abstract

Research background: The literature has argued that accounting for intangible assets and goodwill provides a wide range for managers to manipulate earnings.

Purpose: This paper aims to investigate the impact of accounting treatment of intangible assets and goodwill on earnings management.

Research methodology: The study included 115 French companies and 100 UK companies, during 2011–2019, employing multiple regression, where earnings management was measured through discretionary accruals; while accounting for intangibles and goodwill was divided into the capitalization and decapitalization of intangible assets, recognition and derecognition of goodwill, and depreciation and impairment of intangible assets and goodwill.

Results: According to the results, accounting for intangible assets and goodwill has an impact on earnings management, while it is used differently between French and UK companies. In France, companies employ intangible assets capitalization to manipulate earnings, while UK companies use intangible assets capitalization and goodwill recognition.

Novelty: This study provides supplementary evidence for standards setters, managers, and auditors about the contribution of accounting for intangible assets and goodwill in the quality of financial reporting and explores the new tools and practices of earnings management.

Keywords

JEL Classification

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