@article {7271,
	title = {The right time for a big bath: asset impairment recognition in earnings management},
	journal = {Central European Management Journal},
	volume = {31},
	year = {2023},
	abstract = {Purpose {\textendash} The article investigates the patterns of asset impairment recognition in search of signs of {\textquotedblleft}big bath{\textquotedblright} earnings management practices across an internationally diversified sample of public companies. It also elucidates the incentives that may underlie such practices and explores possible safeguards embedded in the existing corporate governance mechanisms.
Design/methodology/approach {\textendash} The article applied static panel and binary logit models to an international firm-level panel dataset of 1045 public companies observed between 2003 and 2018.
Findings {\textendash} Our empirical results suggest that recognition of asset impairment has no determinate impact on earnings volatility. Investigating the possibility of {\textquotedblleft}big bath{\textquotedblright} earnings management practices, the authors found no impact of asset impairment recognition on total senior executive compensation in firms, which pay performance-based remuneration. The quality of corporate governance has appeared to impact the firms{\textquoteright} intertemporal proclivity to recognize asset impairment with those having the more entrenched and
management-controlled boards being more likely to time impairment recognition by delaying it during exceptionally good and exceptionally bad years. While generally unlikely, recognition of asset impairment in a period with a recorded negative operating performance is found to be closely associated with key executive departures.
Originality/value {\textendash} The article corroborates the salient role of corporate governance mechanisms in shaping the intertemporal patterns of asset impairment recognition. The possible remedies to the phenomenon should be derived therefrom.},
	issn = {2658-0845 },
	doi = {10.1108/CEMJ-12-2021-0156}
}
