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Accounts and Accountability. Impairment of goodwill

Sandell, Niklas LU (2014) In Working paper series / Lund Institute of Economic Research, School of Economics and Management
Abstract
The core sense of accountability is the demanding and giving of accounts. Especially, when the outcome is negative, the management can be expected to account for the failure event, contextualizing the numerical outcome. In this paper the particular failure event of goodwill impairment, and the response of the management in the financial report is studied. Even though not necessarily being a failure event, it is reasonable to assume that an impairment will, if not explained, be perceived as such. Using an account typology the responses in financial reports have been scrutinised. In general the explanatory value of those responses is weak. Accountability does not seem to imply a requirement for the management to explain themselves in the... (More)
The core sense of accountability is the demanding and giving of accounts. Especially, when the outcome is negative, the management can be expected to account for the failure event, contextualizing the numerical outcome. In this paper the particular failure event of goodwill impairment, and the response of the management in the financial report is studied. Even though not necessarily being a failure event, it is reasonable to assume that an impairment will, if not explained, be perceived as such. Using an account typology the responses in financial reports have been scrutinised. In general the explanatory value of those responses is weak. Accountability does not seem to imply a requirement for the management to explain themselves in the financial report. The role of the financial report as a mean to hold the management accountable is likely weakened by the institutionalization of the reporting language, partly through the professionalization of report writing. Also, the possibilities of explaining complex cause and effect relationships might be accepted as limited. In this sense the accountability requirements of the financial report extend not much further than to the non-contextualized accounting language. Even though the performative quality of the language enhancing our understanding of the particular failure event is limited, the language used still performs as part of creating or protecting the discourse of “mergers and acquisitions”, deemphasising the rather few impairments made, describing them as being outside the control of the management or fairly insignificant. In this sense the language takes part in preserving the image of mergers and acquisitions as a prestigious and value creating business activity. (Less)
Please use this url to cite or link to this publication:
author
organization
publishing date
type
Working Paper
publication status
published
subject
keywords
accounts, accountability, financial reporting, impairment, goodwill
in
Working paper series / Lund Institute of Economic Research, School of Economics and Management
issue
1
pages
28 pages
publisher
Lund Institute of Economic Research
ISSN
1103-3010
language
English
LU publication?
yes
id
8c0afd44-26a1-403b-995c-ee275e940732 (old id 4864364)
alternative location
http://www.lri.lu.se/media/lri/workingpapers/2014-1.pdf
date added to LUP
2014-12-16 13:20:36
date last changed
2016-04-15 22:31:27
@misc{8c0afd44-26a1-403b-995c-ee275e940732,
  abstract     = {The core sense of accountability is the demanding and giving of accounts. Especially, when the outcome is negative, the management can be expected to account for the failure event, contextualizing the numerical outcome. In this paper the particular failure event of goodwill impairment, and the response of the management in the financial report is studied. Even though not necessarily being a failure event, it is reasonable to assume that an impairment will, if not explained, be perceived as such. Using an account typology the responses in financial reports have been scrutinised. In general the explanatory value of those responses is weak. Accountability does not seem to imply a requirement for the management to explain themselves in the financial report. The role of the financial report as a mean to hold the management accountable is likely weakened by the institutionalization of the reporting language, partly through the professionalization of report writing. Also, the possibilities of explaining complex cause and effect relationships might be accepted as limited. In this sense the accountability requirements of the financial report extend not much further than to the non-contextualized accounting language. Even though the performative quality of the language enhancing our understanding of the particular failure event is limited, the language used still performs as part of creating or protecting the discourse of “mergers and acquisitions”, deemphasising the rather few impairments made, describing them as being outside the control of the management or fairly insignificant. In this sense the language takes part in preserving the image of mergers and acquisitions as a prestigious and value creating business activity.},
  author       = {Sandell, Niklas},
  issn         = {1103-3010},
  keyword      = {accounts,accountability,financial reporting,impairment,goodwill},
  language     = {eng},
  note         = {Working Paper},
  number       = {1},
  pages        = {28},
  publisher    = {Lund Institute of Economic Research},
  series       = {Working paper series / Lund Institute of Economic Research, School of Economics and Management},
  title        = {Accounts and Accountability. Impairment of goodwill},
  year         = {2014},
}