Long-Lived Asset Impairments and Future Performance under US GAAP and IFRS

Monday, May 6, 2013 ( 2:00 pm to 3:00 pm )

Location: Babbio 430

Long-Lived Asset Impairments and Future Performance under US GAAP and IFRS


Hsiao-Tang Hsu, Ph.D. Temple University


This paper investigates the role of long-lived asset impairments in predicting future firm performance under U.S. GAAP and IFRS. I provide evidence that total impairments reported under IFRS are significantly and negatively associated with future cash flows and future earnings whereas those reported under U.S. GAAP generally are not. Under IFRS, impairments of tangible assets are persistently associated with future performance. Goodwill impairments under IFRS are less informative but associated with future earnings. Testing IFRS reporters, I find the asset impairments are more informative in countries with common law legal origin and high enforcement. Overall, the results suggest that impairment accounting standards under IFRS are more informative about future firm performance, but such informativeness also depends on the type of asset impaired and institutional characteristics of reporting environment.


Hsiao-Tang (Tom) Hsu is a PhD candidate in Temple University and expected to graduate in summer 2013. He also has an LL.M. specialized in Taxation, London School of Economics, UK and an MBA in Accounting, National Chengchi University, Taiwan. His research interests include international accounting and financial accounting.