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

Earnings Informativeness of Long-Lived Assets Impairment Recognized and Reversals 224 informativeness of current earnings for firms with asset impairment reversals, and is positive and statistically insignificant. Note that Trottier (2013) argues that allowing reversals promotes truthful reporting without increasing opportunism. However, previous studies (e.g., Ai, 2005; Duh et al., 2009; Chen et al., 2009; Zhang et al., 2010) have also provided evidence of managerial incentives that can explain the recognition of asset impairment and reversal decisions. Although the third hypothesis does not gain empirical support in the analysis, the finding to some extent supports the managerial incentives school. Nevertheless, we note that only 7.2% (68/943) of impairment recognizing firms reversed their impairments in the following year. We cannot exclude that the paucity of reversals contributed to this somewhat frustrating result. 12,13 12 This study extends the reversing period to subsequent two accounting years to measure the dummy variable of the reversing assets impairment sample (REV variable) and reruns Reg. (2). The further testing does not qualitatively change the results. 13 We add three interactive variables, i.e., LEV t *X t3 , MB t *X t3 , and SIZE t *X t3 , to control the interaction between X t3 and the control variables (Tucker and Zarowin, 2006; Reg. (7)) and rerun the regressions. The results are approximately the same as in the initial empirical findings.