Why reduce profit?: accounting choice of impairments in Swedish listed corporations

Pernilla Broberg; Sven-Olof Collin; Torbjörn Tagesson; Monika Axelsson; Charlotta Schéle

doi:10.1504/IJAF.2011.042220

Why reduce profit? accounting choice of impairments in Swedish listed corporations

Pernilla Broberg, Sven-Olof Collin, Torbjörn Tagesson, Monika Axelsson, Charlotta Schéle

Research output: Contribution to journal › Article › peer-review

Abstract

Positive accounting theory and institutional theory are used in conjunction in order to explain accounting choice. The theory is applied on IAS 36 (impairment of assets), and tested on a sample of listed Swedish corporations. We find that the choice is mainly induced by agency and general business factors and to a slighter degree by institutional factors. Especially, we find that institutional influence will be stronger when it is in the interest of important stakeholders; that impairments can be used as a mean of signalling trust to absent owners and that the institutional element of tradition cannot be tested separately from the agency element of opportunism.

Original language	English
Pages (from-to)	49-71
Number of pages	22
Journal	International Journal of Accounting and Finance
Volume	3
Issue number	1
DOIs	https://doi.org/10.1504/IJAF.2011.042220
Publication status	Published - 2011

Swedish Standard Keywords

Business Administration (50202)

Keywords

Sweden
absent owners
accounting choice
asset impairment
institutional theory
opportunism
positive accounting theory
stakeholders
tradition
trust

Access to Document

10.1504/IJAF.2011.042220

Cite this

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title = "Why reduce profit?: accounting choice of impairments in Swedish listed corporations",

abstract = "Positive accounting theory and institutional theory are used in conjunction in order to explain accounting choice. The theory is applied on IAS 36 (impairment of assets), and tested on a sample of listed Swedish corporations. We find that the choice is mainly induced by agency and general business factors and to a slighter degree by institutional factors. Especially, we find that institutional influence will be stronger when it is in the interest of important stakeholders; that impairments can be used as a mean of signalling trust to absent owners and that the institutional element of tradition cannot be tested separately from the agency element of opportunism.",

keywords = "Sweden, absent owners, accounting choice, asset impairment, institutional theory, opportunism, positive accounting theory, stakeholders, tradition, trust",

author = "Pernilla Broberg and Sven-Olof Collin and Torbj{\"o}rn Tagesson and Monika Axelsson and Charlotta Sch{\'e}le",

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AU - Broberg, Pernilla

AU - Collin, Sven-Olof

AU - Tagesson, Torbjörn

AU - Axelsson, Monika

AU - Schéle, Charlotta

PY - 2011

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N2 - Positive accounting theory and institutional theory are used in conjunction in order to explain accounting choice. The theory is applied on IAS 36 (impairment of assets), and tested on a sample of listed Swedish corporations. We find that the choice is mainly induced by agency and general business factors and to a slighter degree by institutional factors. Especially, we find that institutional influence will be stronger when it is in the interest of important stakeholders; that impairments can be used as a mean of signalling trust to absent owners and that the institutional element of tradition cannot be tested separately from the agency element of opportunism.

AB - Positive accounting theory and institutional theory are used in conjunction in order to explain accounting choice. The theory is applied on IAS 36 (impairment of assets), and tested on a sample of listed Swedish corporations. We find that the choice is mainly induced by agency and general business factors and to a slighter degree by institutional factors. Especially, we find that institutional influence will be stronger when it is in the interest of important stakeholders; that impairments can be used as a mean of signalling trust to absent owners and that the institutional element of tradition cannot be tested separately from the agency element of opportunism.

KW - Sweden

KW - absent owners

KW - accounting choice

KW - asset impairment

KW - institutional theory

KW - opportunism

KW - positive accounting theory

KW - stakeholders

KW - tradition

KW - trust

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M3 - Article

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EP - 71

JO - International Journal of Accounting and Finance

JF - International Journal of Accounting and Finance

IS - 1