Determinants of Goodwill Impairment Recognition and Measurement: New Evidence from Moroccan Listed Firms

Abstract

This study examines the determinants of goodwill impairment recognition under IFRS 3 in the context of Moroccan listed firms. Using an unbalanced panel covering the period of 2006–2024 and comprising 862 firm-year observations, we employ a three-stage empirical strategy that integrates a Probit model to estimate the likelihood of impairment, a Tobit model to assess the magnitude of the loss, and a Heckman two-step procedure to correct for potential self-selection. The results show that goodwill impairment reflects key economic and financial fundamentals, including revenue growth, book-to-market ratios, and operating performance. However, both real and accrual-based earnings management significantly influence the probability and intensity of impairment, particularly through abnormal cash flows and income-smoothing behavior. Discretionary accruals become significant only after correcting for selection bias, indicating that they do not drive the recognition decision but contribute to determining the size of the impairment once it has been recorded. The findings are robust across multiple specifications and contribute to the broader literature on financial reporting quality under IAS/IFRS, while enriching empirical evidence on managerial discretion and earnings management in emerging-market environments.