The impact of industry competition on the value relevance of goodwill impairments across different information environments

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 10.2139/ssrn.4596667 Item availability restricted.

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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.

Item Type:	Article
Date Type:	Published Online
Status:	In Press
Schools:	Business (Including Economics)
Publisher:	Elsevier
ISSN:	1061-9518
Date of First Compliant Deposit:	8 October 2023
Date of Acceptance:	8 October 2023
Last Modified:	16 Jan 2024 16:23
URI:	https://orca.cardiff.ac.uk/id/eprint/163049

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