The impact of industry competition on the value relevance of goodwill impairments across different information environments
The impact of industry competition on the value relevance of goodwill impairments across different information environments
This paper presents an investigation into the impact of industry-level competition on the value relevance of goodwill impairments and whether this impact is more pronounced for firms in countries with rich information environments. We find that companies facing higher product market competition tend to report impairment losses that are relevant to investors’ equity valuation decisions. This is consistent with the notion that companies in competitive industries are subject to greater scrutiny and have fewer incentives to manipulate their impairment reporting. We also find that the impact of industry competition on the value relevance of goodwill impairments is more pronounced in rich information environments (i.e., market-based economies). These findings underscore the impact of competition and its interplay with the information environment on the market perception of accounting information that is subject to managerial discretion.
Alshehabi, Ahmad
df429384-77a3-4c65-b0a2-b98c83c885d7
Halabi, Hussein
abf2b13e-e1fe-4fe0-8beb-9a48059d8cfa
Adwan, Sami
f56b2168-235c-47db-9250-0744d06b27a2
Boubaker, Sabri
325f4299-7522-4d41-a600-f8a33e418cf4
Alshehabi, Ahmad
df429384-77a3-4c65-b0a2-b98c83c885d7
Halabi, Hussein
abf2b13e-e1fe-4fe0-8beb-9a48059d8cfa
Adwan, Sami
f56b2168-235c-47db-9250-0744d06b27a2
Boubaker, Sabri
325f4299-7522-4d41-a600-f8a33e418cf4
Alshehabi, Ahmad, Halabi, Hussein, Adwan, Sami and Boubaker, Sabri
(2023)
The impact of industry competition on the value relevance of goodwill impairments across different information environments.
Journal of International Accounting, Auditing and Taxation.
(In Press)
Abstract
This paper presents an investigation into the impact of industry-level competition on the value relevance of goodwill impairments and whether this impact is more pronounced for firms in countries with rich information environments. We find that companies facing higher product market competition tend to report impairment losses that are relevant to investors’ equity valuation decisions. This is consistent with the notion that companies in competitive industries are subject to greater scrutiny and have fewer incentives to manipulate their impairment reporting. We also find that the impact of industry competition on the value relevance of goodwill impairments is more pronounced in rich information environments (i.e., market-based economies). These findings underscore the impact of competition and its interplay with the information environment on the market perception of accounting information that is subject to managerial discretion.
Text
Manuscript- JIAAT-D-22-00123R1 (accepted)
- Accepted Manuscript
Restricted to Repository staff only until 6 October 2025.
Request a copy
More information
Accepted/In Press date: 6 October 2023
Identifiers
Local EPrints ID: 483086
URI: http://eprints.soton.ac.uk/id/eprint/483086
ISSN: 1061-9518
PURE UUID: f9f7286e-3837-430d-9656-9b2eff8b44ce
Catalogue record
Date deposited: 23 Oct 2023 16:37
Last modified: 18 Mar 2024 04:06
Export record
Contributors
Author:
Ahmad Alshehabi
Author:
Hussein Halabi
Author:
Sami Adwan
Author:
Sabri Boubaker
Download statistics
Downloads from ePrints over the past year. Other digital versions may also be available to download e.g. from the publisher's website.
View more statistics