This study examines the determinants of early adoption of Statement of Financial Accounting Standards No. 35: Accounting for Asset Impairment. The study matches control firms by fiscal year, similar industry and firm size. The research uses logistic regression model to analyze the differences between early adopters and control firms in electrical industry and non-electrical industries.
Empirical results suggest earnings management is the main determinant of early adoption of the new accounting standard. Empirical results show that early adopters tend to have a higher ratio of debt and decrease in earnings or increase in loss from the previous year. The results also show that early adopters tend to have a higher ratio of assets which are subject to impairment loss.
