Causes and Effects of Discretionary Asset Write-offs,
Journal of Accounting Research
This paper provides evidence on the causes and shareholder wealth effects of discretionary asset write-offs. We find that both managers' incentives to manipulate earnings and economic impairment explain write-off decisions in general, however, incentives play a stronger role in the decision to write-off discretionary items such as intangibles. Investors' reactions to the write-off announcements depend on the nature of the asset being written-off because of the underlying motivation for the wirte-off.