Mandated disclosures under IAS 36 impairment of assets and IAS 38 intangible assets: value relevance and impact on analysts’ forecasts

André, P., Dionysiou, D. and Tsalavoutas, I. (2018) Mandated disclosures under IAS 36 impairment of assets and IAS 38 intangible assets: value relevance and impact on analysts’ forecasts. Applied Economics, 50(7), pp. 707-725. (doi: 10.1080/00036846.2017.1340570)

Abstract

Drawing on a large sample of European firms, we examine whether variant compliance levels with mandated disclosures under IAS 36 Impairment of Assets and IAS 38 Intangible Assets are value relevant and affect analysts’ forecasts. Our results indicate a mean (median) compliance level of about 84% (86%) but high variation among firms and disclosure levels regarding IAS 36 being much lower than those regarding IAS 38. In depth, analysis reveals that non-compliance relates mostly to proprietary information and information that reveals managers’ judgment and expectations. Furthermore, we find a positive (negative) relationship between average disclosure levels and market values (analysts’ forecast dispersion). Results, however, hold more specifically for disclosures related to IAS 36, and these also improve analysts’ forecast accuracy. Our findings add knowledge regarding the economic consequences of mandatory disclosures, have an appeal to regulators and financial statement preparers and reflect on the IASB’s concerns to increase the guidance and principles on presentation and disclosure.

• Item Type: Articles
• Status: Published
• Refereed: Yes
• Glasgow Author(s) Enlighten ID: Tsalavoutas, Professor Yannis and Dionysiou, Dr Dionysia
• Authors: André, P., Dionysiou, D., and Tsalavoutas, I.
• College/School: College of Social Sciences > Adam Smith Business School > Accounting and Finance
• Journal Name: Applied Economics
• Publisher: Taylor and Francis
• ISSN: 0003-6846
• ISSN (Online): 1466-4283
• Published Online: 26 June 2017
• Copyright Holders: Copyright © 2017 Informa UK Limited, trading as Taylor & Francis Group
• First Published: First published in Applied Economics 50(7):707-725
• Publisher Policy: Reproduced in accordance with the copyright policy of the publisher