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Disclosing goodwill impairments: An analysis of the reasons provided by Finnish companies
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School of Business |
Master's thesis
Electronic archive copy is available via Aalto Thesis Database.
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en
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60
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Abstract
This study examines the disclosures related to goodwill impairments made by Finnish companies listed on Nasdaq Helsinki from 2020 to 2023. The research focuses on the clarity, consistency, and sufficiency of these disclosures, assessing whether companies provide meaningful explanations for impairments in accordance with IFRS requirements.
Using qualitative content analysis, the study categorizes the reasons disclosed for goodwill impairments into macroeconomic factors, company-specific performance issues, geopolitical events, and strategic business decisions. The findings reveal significant variation in disclosure quality, with some firms providing detailed explanations, while others rely on generic statements with little insight. Additionally, despite goodwill being tied to mergers and acquisitions (M&A), only a few companies explicitly link impairments to past acquisitions, limiting transparency for investors.
The study also identifies a shift in impairment narratives over time. In 2020, COVID-19 was the dominant reason for impairments, whereas in 2022 and 2023, the war in Ukraine, inflation, and rising interest rates became key factors. However, disclosure practices remain inconsistent, raising concerns about compliance with IFRS and the decision-usefulness of financial statements.
The findings contribute to the ongoing regulatory discussion on goodwill ac-counting, particularly in the context of the IASB’s 2024 Exposure Draft, which seeks to improve goodwill-related disclosures. By analyzing disclosure practices in Finnish companies, this study provides practical insights for regulators, investors, and auditors aiming to enhance financial reporting transparency.