A STUDY ON THE CORRELATION BETWEEN ASSETS IMPAIRMENT AND EARNINGS MANAGEMENT

In this paper we explored the correlation between assets impairment and earning management of publicly listed companies in Taiwan and analyzed that in addition to assets impairment, whether companies would apply discretionary accruals as agency variable in earnings management. Results of the study found that companies` scale and discretionary accruals are negatively correlated in significant level, indicating that assets impairment can also have effect on companies’ earnings management. In addition, there is no evidence showing correlation between reversal of asset impairment and earnings management.