Consistent application of IFRS, an empirical study of the effect of enforcement on impairment of assets (IAS 36)

The consistent application of IFRS is a concern for the different users of financial statements. In this context this study aims to investigate the impact exercised by the enforcement of accounting standards on the consistent application of IAS 36 ‘impairment of assets’. Listed companies from 25 countries applying IFRS are selected. Linear and logistic regressions are performed on 5524 companies from these countries in order to study the impact of enforcement on impairment magnitude and recognition. Enforcement is represented by different indexes which are used in the literature. The enforcement effectiveness variables are defined according to reports generated by different institutions and organizations. The main results indicate that in case of an effective enforcement, a decrease in impairment recognitions takes place.