Goodwill impairments and chief executive officer tenure

The purpose of this paper is to examine the tenure of the chief executive officers of publicly held companies and their corresponding goodwill impairment decisions. An opportunity for managers to manage earnings exists via the Financial Accounting Standards Board's (FASB) goodwill accounting ru...

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Bibliographic Details
Published in:Critical perspectives on accounting 2008-12, Vol.19 (8), p.1370-1383
Main Authors: Masters-Stout, Brenda, Costigan, Michael L., Lovata, Linda M.
Format: Article
Language:English
Subjects:
Accounting standards
Chief executive officers
Earnings
Earnings management
Evaluation
Financial reporting
Firm value
Goodwill
Impaired assets
Public companies
Public enterprises
Studies
Tenure
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Summary:The purpose of this paper is to examine the tenure of the chief executive officers of publicly held companies and their corresponding goodwill impairment decisions. An opportunity for managers to manage earnings exists via the Financial Accounting Standards Board's (FASB) goodwill accounting rules. It is hypothesized that CEOs will recognize this impairment in the early years of their tenure because blame can be placed on prior management's acquisition decisions, expensing goodwill early will make future earnings look better, or an objective evaluation of the reporting unit increases impairments.
ISSN:1045-2354
1095-9955
DOI:10.1016/j.cpa.2007.04.002