臺大管理論叢 NTU Management Review VOL.29 NO.1

207 NTU Management Review Vol. 29 No. 1 Apr. 2019 with more strategic earnings reporting. 4 Riedl (2004) found a higher association between write-offs and “big bath” reporting behavior after SFAS No. 121 implementation. This “big bath” reporting behavior more likely reflects the opportunistic reporting behavior of managers rather than the provision of their private information. In the context of IFRS, Szczesny and Valentincic (2013) found that private German firms impair assets more when they are more profitable or have more financial debt. To some extent, this supports Riedl’s (2004) contention. Focusing on goodwill impairment, previous studies have shown that SFAS No. 142 provides managers with too much discretion for goodwill write-offs (e.g., Henning, Shaw, and Stock, 2004; Ramanna, 2008; Ramanna and Watts, 2012; Lawrence, Sloan, and Sun, 2013; Li and Sloan, 2017). Yet, Jarva (2009) found no agency- based motives for goodwill write-downs and concluded that goodwill impairments are more closely related to economic factors than to opportunistic incentives. Thus, empirical findings are mixed regarding the motives of firms in recognizing impairment. As for the issues of impairment reversal, Aboody, Barth, and Kasznik (1999) used financial data from UK firms to find that upward revaluations indicate good financial health and are correlated with good future performance. Ai (2005) found that firms facing financial distress engage in opportunistic asset write-offs and reversals to manage earnings. In Taiwan, Duh et al. (2009) found that firms recognizing more impairment losses are more likely to reverse impairment losses when doing so would avoid an earnings decline in a subsequent period, which is consistent with the “cookie jar” reserve hypothesis. Rennekamp et al. (2015) found that managers responsible for decisions to record asset impairment are more likely to invest in the impaired division when the accounting effect of the impairment is reversible than when it is irreversible. Two studies have examined this issue from the regulation perspective in China. Chen, Wang, and Zhao (2009) found firms reverse asset impairments to reduce or avoid the possibility of trading suspensions or de-listing due to profitability-based regulations. Zhang et al. (2010) investigated the effect of moving away from a standard like IAS No. 36 to one that prohibits reversals of impairments on long-lived assets in China. Recently, Trottier (2013) found that permitting reversals significantly increases the likelihood that a manager will record an impairment, especially given bonus incentives to do so. Trottier provided an 4 Yen and Chao (2009) documented that asset write-offs are taken concurrently with discretionary accruals to manage earnings downward and that their magnitudes are determined jointly in Taiwan. Zeng, Li, Wang, and Huang (2011) also found that Chinese firms strategically decrease the write-offs or increase the reversals of asset impairment losses to qualify for issuing new shares.