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.

Parents' experiences of child growth and development concerns: an interpretative phenomenological analysis

Background: Assessing child growth and development is complex. Delayed identification of growth or developmental problems until school entry has health, educational and social consequences for children and families. Health care professionals (HCPs), including Public Health Nurses work with parents to elicit and attend to their growth and development concerns. It is known that parents have concerns about their children’s growth and development which are not expressed in a timely manner. Measuring parental concern has not been fully effective to date and little is known about parents’ experiences of expressing concerns. Aim: To understand how parents make sense of child growth or development concerns. Method: The study was qualitative using Interpretative Phenomenological Analysis (IPA). A purposeful sample of 15 parents of pre-school children referred by their PHN to second tier services was used. Data were collected by semi-structured interviews. NVivo version 10 was used for data management purposes and IPA for analysis. Findings: Findings yielded two contextual themes which captured how parents described The Concern – ‘telling it as it is’ and their experiences of being Referred on. Four superordinate themes were found which encapsulated the Uncertainty – ‘a little bit not sure’ of parents as they made sense of the child’s growth and development problems. They were influenced by Parental Knowledge – ‘being and getting in the know’ which aided their sense-making before being prompted by Triggers to action. Parents then described Getting the child’s problem checked out as they went to express their concerns to HCPs. Conclusion and Implications: Parental expression of concerns about their child is a complex process that may not be readily understood by HCPs. A key implication of findings is to reappraise how parental concern is elicited and attended to in order to promote early referral and intervention of children who may have growth and development problems.