Market reaction to goodwill impairment losses - A study examining the immediate and long-term stock price reactions surrounding and following the announcements of goodwill impairment losses

Sammanfattning: Since 2005 goodwill does not disappear from the balance sheet as time passes since it's no longer amortized; instead IFRS require annual impairment tests of goodwill. This paper examines the empirical relation between stock price reactions and reported goodwill impairment losses since the introduction of the new regulatory framework. An event study is conducted on companies listed on Nasdaq OMX Stockholm between 2009 and 2013. Statistically significant cumulative abnormal returns are documented in the event window surrounding announcements, suggesting goodwill impairment losses are value relevant. Using Calendar-Time Portfolio no statistically significant abnormal returns are documented in the long-term, although data indicate minor negative abnormal returns.