Towards a theory of goodwill impairment testing choices under IFRS

A substantial number of economically significant jurisdictions have recently adopted IFRS as their mandated suite of accounting and reporting rules. In some cases, the transition to IFRS based reporting has resulted in substantial departures from typical prior practice. The IFRS accounting and reporting requirements for goodwill, lAS 36 - Impairment of Assets, represent a case in point. However, given the limited period over which the IFRS approach to goodwill accounting and reporting have been In place, little research has to date been conducted on the impact of and the manner in which reporting entities have approached the new regime. In particular, the emergence of a new reporting regime fundamentally dissimilar in its character to precursor regimes calls for the development of theory capable of yielding robust insights in the context of a changed institutional environment. Consequently, drawing on data observations from a recent adopter of IFRS rules, Australia, and applying a grounded approach to theory development, this paper contributes to the literature by yielding insights into variables likely to be of significance for future large sample empirical research into IFRS goodwill reporting.