1、1 中文 2845 字 本科毕业论文（设计） 外 文 翻 译 外文出处 Accounting Horizons Sep92， vol6， issue3， p30-41 外文 作者 Linda j.Zucca and David R.Campbell 原文 ： A Closer Look at Discretionary Writedowns of Impaired Asset The Current Enviroment An asset is said to be impaired when its book value exceeds some measure of its fair va
2、lue. When a firm recognizes this impairment and subsequently records the effect by decreasing the book value of the asset and debiting an income statement account, the firm has recorded a writedown. GAAP clearly allows these writedowns in several situations. First, certain current assets, such as ma
3、rketable securities and inventories, are examined periodically and adjusted to the lower of cost or market. Similarly, long term equity investments are adjusted periodically to the lower of cost or market although the income statement is not affected by the writedown. Finally, any long term assets f
4、or which disposal is contemplated (including assets being sold as part of a discontinued operation) are adjusted to their net realizable value (exit market value less costs of selling and readying for sale). These final typies of writedowns are adequately addressed by APB 30, and there appears to be
5、 no confusion on the application of the rules to these situations, nor any reason to reassess APB 30 at this time. Most of the writedowns which a firm might normally record would fall into one of these three categories. The writedowns which the FASB would specifically target with their potential reg
6、ulation would be those which do not. Timing and Motivation At the current time, partial writedowns of impaired long-lived assets are 2 recognized at the discretion of management (and with the subsequent support of their auditors). Thus, it is important to investigate when management decides that the
7、 impairment should he recorded and what might motivate them to make such a dedsion. It is very difficult to assess the factors which might motivate a manager to record any discretionary event because of the managers inahility or reticence to describe the dedsion process. Often the researcher must dr
8、aw conclusions from the available data to provide apparent motivating factors in the dedsion to record transactions. In this paper, earnings management will be examined as a possible explanation for the timing of and motivation for discretionary writedowns. By observing reported earnings surrounding
9、 the period in which the writedown was announced, two possihle patterns of earnings management can be identified: income smoothing and l)ig baths. Income smoothing describes sm earnings pattern in which management aspires to maintain a steady and predictable rate of earnings growth. Management may t
10、ry to record discretionary gains, losses, or accruals in the period which will best help them to attain their goal of steady growth. This goal may he perceived as desirable because of a management incentive plan structured to reward smooth earnings patterns, or the hope that the market will equate s
11、mooth earnings with lower risk and subsequent higher stock prices. Thus, in the case of writedowns, a firm with an impaired asset may attempt to record the loss in a period of higher than normal earnings, or it may time the loss to coincide with a non-discretionary gain (for example, winning a subst
12、antial settlement in a lawsuit). A second form of earnings management has been referred to as the big bath. Under this scenario, the firm appears to save up discretionary losses or accruals and then record several in the same period or in a period in which the firm has already experienced below norm
13、al earnings. Management might undertake a big bath to signal investors that bad times are behind them and hetter times will follow. In the case of discretionary asset writedowns, this reasoning is particularly appropriate since a writedown results in decreased depredation expense in the future. The
14、hig bath has been mentioned often as a probable motivation for recording asset writedowns. To determine whether earnings management was a possible motivation in the timing of 3 writedowns in this study, a measure of expected eamings was compared to reported earnings for each firm in the period in wh
15、ich the writedown was recorded. Income smoothing is characterized by periods in which prewritedown earnings were higher than expected. By recording the writedown, reported earnings were closer to (but not less than) the level expected. A big bath is characterized by periods in which pre-writedown ea
16、rnings were already below expected earnings. Thus, the firm recorded the writedown in a period in which other losses or accruals were already recorded or in a period of below normal operations. Financial Consequences of Discretionary Writedowns The financial consequences of recording discretionary w
17、ritedowns of impaired assets can be assessed by observing certain finandal indicators at the time of and after the writedown. Three specific indicators have been chosen in this study: (1) the reaction of the stock market, (2) the frequency of subsequent merger or acquisition activity, and (3) the su
18、bsequent financial health of the firms as measured by certain key ratios. Each of these three indicators will be discussed separately. Stock Market Reaction. The average stock returns of the writedown firms (adjusted for cash and stock dividends as well as firm-spedfic risk) were compared with the m
19、arket return for a period of sixty days before to sixty days after the announcement of the writedown. On the average, there were no significant unusual or excess returns earned by the writedown firms over this period of time.In addition, they performed similarly to a control group of firms matched o
20、n the basis of industry and asset size over the same period of time. These results do not refute the anecdotal evidence that firms announcing discretionary price increases. Rather, they indicate that for every firm that achieves these positive results, there is a firm for which the market acts negat
21、ively.Thus, a firm which records a writedown is just as likely to experience a negative market reaction as it is a positive market reaction. Subsequent Merger or Acquisition Activity. Some people in the business and academic communities believe that a writedown may be an indicator of some sort of major capital structure change such as an acquisition of,acquisition by, or a merger
