The standard concerning the impairment testing for goodwill is often considered to be one of the most difficult standards in IFRS to comply with, which is largely due to the subjective and complex nature of the standard. Despite, the obvious issues with the standard it has remained fairly unaltered since its implementation back in 2005. The purpose of this research was to investigate to what extent companies listed on NASDAQ OMX Stockholm comply with the disclosure requirements in IAS 36, paragraph 134. This research also intended to answer whether there is an association between the companies’ compliance level and certain company characteristics, more specifically company size, profitability, goodwill intensity and industry type. The study also considered how time affected the compliance level. We devised hypotheses for each of the company characteristics, and these were formulate with both previous research and theory in mind. The theories that were utilized in this study were the agency theory, the political cost theory and the cost-benefit theory. The hypotheses that lacked a concrete linkage to one of the theories were instead justified using the reasoning’s found in pre-existing disclosure studies. The necessary data was collected from companies’ annual reports, which we accessed from either Business Retriever or directly from the companies’ official websites. An own interpretation of IAS 36, paragraph 134 was made in order to able to assess each company on equal terms. The collected data was then transferred to a disclosure index in order to get a compliancy score for each company investigated. The empirical findings of this research showed that two out of five hypotheses were significantly associated with the companies’ compliance level. The analysis rejected hypotheses related to profitability, goodwill intensity and industry type. The findings however showed that both year and company size are associated with the compliance level. The positive association between compliance and year, implies that compliance increases as companies get more accustomed to the standard. The findings further suggest that larger companies comply better with standard because they are under more political pressure and more inclined to please their stakeholders.

Title - To what extent do firms comply with IAS 36?: A study based on firms listed on Nasdaq OMX Stockholm.Level - Master thesis in business administration.Authors - Stina Skyttner and Nora Wennertorp.Supervisors - Arne Fagerström and Saeid Homayoun.Date - 2 June 2017.Purpose - The overall aim of this paper is to build upon earlier research by examining to what extent firms listed on Nasdaq OMX Stockholm comply with disclosure requirements of IAS 36 paragraph 134. The second aim is to examine what variables affect the compliance level of these firms.Methodology - A sample of 90 firm’s annual reports and disclosure notes are surveyed from 2006 to 2016, and aggregated compliance scores are determined and analysed using quantitative statistical methods. The dependent variable is compliance with disclosure requirements of IAS 36 paragraph 134. The independent variables are size, industry, audit firm, leverage ratio, profitability ratio, learning, and the 2008 financial crisis.Findings - The results show that firm’s compliance levels with IAS 36 paragraph 134 have increased from 2006 to 2016, but they are still low compared to what the standard requires. There is not a significant increase in compliance levels during the crisis, therefore the 2008 financial crisis cannot be seen as a determinant factor of compliance with the disclosure requirements. The results show that larger firms and firms with higher leverage- and profitability ratios comply to a greater extent with the standard. Further, the type of industry in which the firm operates in affected the compliance level.Keywords - Impairment testing of Goodwill, IAS 36 paragraph 134, Compliance, Financial Reporting.