영업권손상인식의 전략적 회계처리 : 최고경영자 교체시점의 Big Bath를 중심으로

Abstract

This study examines the opportunistic behavior of CEO with respect to the adoption of K-IFRS 1036, Impairment of Assets, based on whether a new CEO takes a big bath by recognizing impairment of goodwill in the year of change. Before K-IFRS 1036 was introduced, companies were allowed to amortize goodwill over 20(or fewer) years. However, after it was introduced, amortization of goodwill was prohibited and companies were required to follow impairment regime. As a result, companies are required to test purchased goodwill for impairment loss on annual basis. Goodwill recognized in a business combination is an asset representing the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. Goodwill does not generate cash flows independently of other assets or groups of assets, and often contributes to the cash flows of multiple cash-generating units(CGUs). For the purpose of impairment testing, goodwill acquired in a business combination should be allocated to each of the acquirer’s CGUs, or groups of CGUs that is expected to benefit from the synergies of the combination. A CGU is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. An impairment loss should be recognized for a CGU if the recoverable amount of the unit is less than the carrying amount of the unit. The recoverable amount of a CGU is the higher of the cash-generating unit’s fair value less costs of disposal and its value in use. Like IFRS, amortization of goodwill was prohibited and required annual impairment test under US-GAAP as a result of the adoption of SFAS 142, Goodwill and Other Intangible Assets. Bens et al.(2011) suspect that the decrease in information content is due in part to the increasing complexities of applying SFAS 142. Li and Sloan(2011) suggests that goodwill impairment decisions by management are not a timely reflection of the changes in estimated future cash flows but rather a delayed response to the substantial expiration of the benefits from goodwill. Zang(2008) found that firms that have undergone a recent management change report greater goodwill impairment with respect to the adoption of SFAS 142. This study focused on the timing of recognition of goodwill impairment. A recent change in CEO may be associated with the frequency and magnitude of the goodwill impairment loss. A new CEO may overstate the goodwill impairment loss because by attributing the impairment loss to the poor decisions of his predecessor. As a result, a new CEO can reduce the possibility of future recognition of goodwill impairment loss, and enhance his financial performance after the transition period. Strong and Meyer(1987), Pourciau(1993) and Francis et al.(1996) found that new managements tend to take income-decreasing discretionary accruals(big bath) by writing off assets and expect to increase the reserves for future costs or losses. Using 434 sample firms with available goodwill impairment loss data as of Dec. 31, 2012 and 2013, we are able to find the evidence that there is a statistically significant positive association between the recognition of goodwill impairment(both frequency and magnitude) and CEO turnover. That is, impairment loss is greater in frequency and magnitude when there has been a recent CEO turnover. Overall, our results suggest that new CEO exploit the discretion in recognition of goodwill impairment afforded by K-IFRS 1036 to increase the reserves for future costs or losses. These findings provide valuable insights to investors, creditors, auditors, and regulators and other interested users.