A study of Swedish listed companies to determine if their goodwill impairment disclosures comply with the requirements in IAS 36

University essay from Högskolan i Jönköping/IHH, Företagsekonomi; Högskolan i Jönköping/IHH, Företagsekonomi



Purpose The purpose of this study is to investigate to what extent Swedish listed companies comply with the disclosure requirements in IAS 36, paragraph 134. The study also aims at assessing whether certain company-specific characteristics could impact companies´ disclosure levels. A greater consideration is given to size (list) variable, among all characteristics.

Method – The study was conducted using a quantitative approach, with a deductive nature. The data was collected from companies´ annual reports, which were retrieved from the database Retriever Business or directly from the entities´ websites. IAS 36, paragraph 134, was interpreted and transformed into a disclosure checklist, which was used in the assessment of the goodwill impairment notes in companies´ financial reports. The collected data was transferred into scoreboards, which made it possible to assess the compliance level. The research questions were answered through charts and tables and to confirm the findings, a regression analysis was performed.

Empirical findings– The results of this research showed that Swedish listed companies do not fully comply with the disclosure requirements in IAS 36. However, modest improvements were found over a nine-year period. The greatest increase in compliance was shown between the years 2005-2006. It was evident that the highest compliance levels were related to the fundamental criteria and that the more specific criteria contained lower compliance levels. The size (list) and the industry-type turned out to be the only influential variables in this study.

Contribution – The existence of non-compliance stresses the necessity of becoming conscious of this issue. By emphasizing the issue on non-optimal disclosures, different parties become aware of it, hence, have a better opportunity to counter the problem. 

Originality/value– This study is considered to be unique since it uses a combination of two approaches in the assessment of certain variables´ impacts on the compliance. The study further takes an extensive time perspective as it observes the disclosure behavior over a nine-year period. The subject is not completely new within the goodwill field since the topic has been debated for many years. However, previous studies have taken a shorter time perspective and have been conducted in different contexts. Statistical testing has been applied in the studies since they usually use a greater number of variables when explaining the compliance levels.

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