Cambiamenti di cash generating unit e valutazione dell’avviamento

This paper examines whether changes in cash generating units (CGUs) affect the magnitude of goodwill write-offs, with reference to the impact of IAS 36 on a sample of Italian and British firms. As regards an accounting regulation that allows significant unverifiable estimates whilst at the same time one that requires a high level of disclosure, the paper proposes that an unjustified change in the specific CGUs to which each goodwill has to be allocated could reveal earnings management. The change is defined "unjustified" if there is not a business combination which has caused the change or if the internal reorganization is not adequately disclosed. In this context, it is assumed that an unjustified increase in the number of CGUs to which goodwill is allocated will cause higher goodwill write-offs than those recorded in the previous period. On the other hand, it is hypothesized that an unjustified decrease in the number of CGUs is associated to non-impairment or to goodwill write-offs lower than in the previous period. The empirical results confirm the two hypotheses, in both the Italian and British samples. These findings are consistent with earnings management theory insights, suggesting that the profiles of subjectivity inherent in impairment test assumptions could be used opportunistically by managers.

Keywords: Cash Generating Units, goodwill, impairment test, earnings management, write-offs, disclosure

Gabriele D'Alauro, Cambiamenti di cash generating unit e valutazione dell’avviamento in "FINANCIAL REPORTING" 2/2012, pp 43-79, DOI: 10.3280/FR2012-002003