Causes of Long-Term Asset Write-offs by Listed Companies in Chinas Capital Market
Accounting System for Business Enterprise allows enterprises to write off long-term assets. Compared with short-term assets, long-term assets have longer duration of use and the fair value is more difficult to quantify. Thus, write-offs of long-term assets have an enormous impact on the book value of assets and accounting income. In this paper, we study the causes of long-term asset write-offs for listed Chinese companies after the implementation of the Accounting System for Business Enterprise. In particular, we examine two aspects of asset write-offs: the decision to take write-offs or not, and the size of write-offs. Our results suggest that regulatory policies and contract costs affect both aspects of the long-term asset write-offs. The effect of regulatory policies is especially large. Among the regulatory policy factors considered, allotment intention and the ST label only affect the decision to take write-offs, while the turnover of executives only affects the magnitude of write-offs. In addition, write-off decisions are driven by the incentives of the listed companies that incur initial losses, are labeled as ST and have allotment intention. At the same time, write-off decisions are negatively related to economic trends. These results imply that long-term asset write-offs by listed companies have been used as a tool for earning management.
Long-term asset write-offs Earning management
Zhu Yan Gu Weimin
School of Management at Huazhong University of Science and Technology, Wuhan, Hubei province, P.R.China, 430074
国际会议
第六届管理学国际会议(Proceedings of ICM2007 the 6th International on Management)
武汉
英文
1907-1917
2007-08-03（万方平台首次上网日期，不代表论文的发表时间）