No description available.

The transition to the IFRS framework has contributed to changes in the handling of goodwill. The yearly impairment test has contributed with subjectivity in the measurements resulting in fewer but larger impairments. The purpose of the study is to investigate how postponement of goodwill impairment is conducted and if managers thereby contribute to a distortion of the underlying qualitative characteristics in financial reporting. Proxies for earnings management activities, through cash flow manipulation, are computed cross-sectionally by sector-year with at least ten observations. Suspect firms are then matched with control firms within the same sector and operating year to control for these effects. The study consists of quantitative secondary data collected from Thomson Reuters Eikon. The data consists of 1090 observations covering seven years of Swedish listed firms with goodwill in their balance sheet. The study concludes that suspect firms experience abnormal current free cash flows compared to control firms, which indicate managers manipulating cash flows in order to postpone goodwill impairment. Also, growth opportunities and analysts' coverage have a significant impact on earnings management activities.