Fair Value, Earnings Management and Asset Impairment: The Impact of a Change in the Regulatory Environment

This paper investigates the practice of asset impairment in large listed UK corporations before and after the change in the regulatory environment to International Financial Reporting Standards. The results find that overall implementation of an asset impairment charge results in a greater amount of income smoothing as opposed to big bath accounting, but that post the change in the regulatory environment, the extent of big bath accounting increases.