Reversal of impairment losses, firm performance and reporting incentives: Evidence from Malaysia

Malaysian Financial Reporting Standard (FRS) No. 136, Impairment of Assets, was issued in 2005. The standard requires public listed companies to report their non-current assets at no more than their recoverable amount. When the value of impaired assets is recovered, or partly recovered, FRS 136 requires the impairment charges to be reversed to its new recoverable amount. This study tests whether the reversal of impairment losses by Malaysian firms is more closely associated with economic reasons or reporting incentives. The sample of this study consists of 182 public companies listed on Bursa Malaysia (formerly known as the Kuala Lumpur Stock Exchange) that reported reversals of their impairment charges during the period 2006-2009. These firms are matched with firms which do not reverse impairment on the basis of industrial classification and size. In the year of reversal, this study finds that the reversal firms are more profitable (before reversals) than their matched firms. On average, the Malaysian stock market values the reversals of impairment losses positively. These results suggest that the reversals generally reflect increases in the value of the previously impaired assets. After partitioning firms that are likely to manage earnings and those that are not, this study finds that there are some Malaysian firms which reverse the impairment charges to manage earnings. Their reversals are not value-relevant, and are negatively associated with future firm performance. On the other hand, the reversals of firms which are deemed not to be earnings managers are positively associated with both future firm performance and current stock price performance, and this is the dominant motivation for the reversal of impairment charges in Malaysia. In further analysis, this study provides evidence that the opportunistic reversals are also associated with other earnings management manifestations, namely abnormal working capital accruals and the motivation to avoid earnings declines. In general, the findings suggest that the fair value measurement in impairment standard provides useful information to the users of financial statements.

A cultural study on communication and technology with specific reference to media in China

This dissertation examines the role of communications technology in social change. It examines secondary data on contemporary China arguing that many interpretations of events in China are unsuitable at best and at worst conceptually damages our understanding of social change in China. This is especially the case in media studies under the ‘democratic framework’. It proposes that there is an alternative framework in studying the media and social change. This alternative conceptual framework is termed a zone of interpretative development offering a means by which to discuss events that take place in a mediated environment. Taking a theoretical foundation using the philosophy of Mikhail Bakhtin this dissertation develops a platform with which to understand communication technology from an anthropological perspective. Three media events from contemporary China are examined. The first examines the Democracy Wall event and the implications of using a public sphere framework. The second case examines the phenomenon of the Grass Mud Horse, a symbol that has gained popular purchase as a humorous expression of political dissatisfaction and develops the problems seen in the first case but with some solutions. Using a modification of Lev Vygotskiĭ’s zone of proximal development this symbol is understood as an expression of the collective recognition of a shared experience. In the second example from the popular TV talent show contests in China further expressions of collective experience are introduced. With the evidence from these media events in contemporary China this dissertation proposes that we can understand certain modes of communication as occurring in a zone of interpretative development. This proposed anthropological feature of social change via communication and technology can fruitfully describe meaning-formation in society via the expression and recognition of shared experiences.