This research aims to examine the effect of long-lived asset impairments
on future operating cash flows of ASEAN firms. In addition, this study also
examine the differences of long-lived assets impairment in predicting firm’s future
cash flows between countries with common law legal system and civil law legal
system in ASEAN. Accounting for long-lived assets impairment is regulated by
International Financial Reporting Standards (IFRS) in the International
Accounting Standards (IAS) No. 36 Impairment of Assets. Information of longlived
assets impairment supposed to meets the fundamental qualitative
characteristics such as relevance. One of the relevance criteria is predictive
value. Therefore, information of long-lived assets impairment supposed to have
predictive value.
The population in this research is manufacturing firms which have been
listed on the stock exchange in Indonesia, Singapore, Malaysia, and Thailand in
2012-2014. Ten firms which report long-lived assets impairment in each country
are taken as sample, resulting in total companies selected are 40 firms or 120
observations. The analytical tools that used in this research are multiple
regression analysis and chow test.
The results show that long-lived assets impairment has a significant and
negative effect on future operating cash flows. In other words, long-lived assets
impairment has predictive ability to future operating cash flows. This finding
suggest that after tested empirically, information of long-lived assets impairment
which stipulated in IAS 36 is consistent with fundamental qualitative
characteristic, i.e., relevance. However, the ability of long-lived assets
impairment in predicting firm’s future operating cash flows between common law
legal system and civil law legal system in ASEAN countries is the same
