This research examine the effect of goodwill impairment on earnings management.
The change of standard stated that goodwill is no longer subject to amortization but
impairment test raised a good chance for management to give their discretion over
goodwill impairment. In this research, I estimate that goodwill impairment
positively affects earnings management measured using discretionary accruals with
board size, leverage, operating cash flows, and political cost as control variables.
The model used for measuring discretionary accruals is Modified Jones model. By
the total sample of 47 firms in Indonesia from 2011-2013, I found that goodwill
impairment positively affects earnings management measured using discretionary
accruals.