By making thorough empirical analysis on the financial data from 2001 to 2007 of listed companies in China, we find that the impairment allowance for non-current assets obviously decreases the quality of accounting earnings. Investment portfolio based on accrual earnings created by impairment allowance for non-current assets can obtain abnormal return. There is a negative relationship between accrual earnings created by impairment allowance and abnormal return. It is concluded that market can't "see through" the influence impairment allowance for non-current assets has on quality of earnings. This supports the regulation of new Chinese Accounting Standard that it forbids the reversion of impairment allowance for non-current assets.
Impairment Allowance for Non-Current Assets: Quality of Earnings and Market Reaction
Second International Conference on Transportation Engineering ; 2009 ; Southwest Jiaotong University, Chengdu, China
2009-07-29
Conference paper
Electronic Resource
English
Impairment Allowance for Non-Current Assests: Quality of Earnings and Market Reaction
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