Accounting choices relating to goodwill impairment: evidence from Malaysia

Abdul Majid, Jamaliah (2013) Accounting choices relating to goodwill impairment: evidence from Malaysia. PhD thesis, University of Glasgow.

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Abstract

This thesis examines the accounting choices related to goodwill impairment exercised by Malaysian listed companies in the first three years of the implementation of FRS 3 Business Combinations (i.e. 2006/7 to 2008/9). Three aspects of these accounting choices are examined, i.e. disclosure, measurement, and recognition of goodwill impairment. This thesis makes four main contributions. Firstly, it shows how the opportunistic behaviour perspective, previously developed and tested by prior studies using data from listed companies in developed economies (reported to have dispersed ownership), helps explain managerial decisions on the measurement of goodwill impairment in the developing economy of Malaysia (documented to have concentrated ownership). Managerial opportunism is normally discussed in prior studies in the context of agency conflict between managers and shareholders in companies with disperse ownership. Because of the high outside ownership concentration found in the Malaysian listed companies, the empirical result of this thesis suggests that most probably the opportunistic behaviour occurs due to an agency conflict between the controlling shareholders (shareholders outside of the companies) and the minority shareholders. Within this conflict, managers would possibly act on behalf of the controlling shareholders at the expense of the minority shareholders. Secondly, this thesis contributes to research design by developing a disclosure framework. Future researchers could make use of the disclosure framework to identify accounting choices related to goodwill impairment, or to interpret their statistical findings, which this thesis has attempted to do. Thirdly, this thesis presents new results from the empirical evidence related to factors influencing managerial decisions on the measurement of goodwill impairment by Malaysian listed companies. These factors are: managerial ownership, and two different measures of pre-write-off earnings. These results highlight the need for future studies to incorporate these variables, in order to iii provide a more comprehensive model of accounting choices related to goodwill impairment. Finally, this thesis constructs a research setting which aims to capture evidence of a recognition choice related to reporting zero goodwill impairment exercised by Malaysian listed companies. Testing this setting allows the recognition study to make a contribution, by identifying the motives of companies for recognising zero goodwill impairment, which has received limited attention in prior studies. Information concerning these motives is useful to the relevant regulatory bodies overseeing financial reporting standards on goodwill.

Item Type: Thesis (PhD)
Qualification Level: Doctoral
Keywords: Accounting choice
Subjects: H Social Sciences > H Social Sciences (General)
Colleges/Schools: College of Social Sciences > Adam Smith Business School > Accounting and Finance
Funder's Name: UNSPECIFIED
Supervisor's Name: Weetman, Prof. Pauline
Date of Award: 2013
Depositing User: Mrs Jamaliah Abdul Majid
Unique ID: glathesis:2013-4095
Copyright: Copyright of this thesis is held by the author.
Date Deposited: 11 Mar 2013 11:11
Last Modified: 18 Apr 2013 08:45
URI: http://theses.gla.ac.uk/id/eprint/4095

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