Oyuntsend Chagnaadorj

Citation

Thesis Title
The predictive ability and classification shifting of discontinued operations under IFRS 5

Read article at Massey Research Online:

International Financial Reporting Standards (IFRS) 5 Non-current Assets Held for Sale and Discontinued Operations requires the separate reporting of discontinued operations in the statement of comprehensive income. This is based on the (untested) assertion that cash flows from discontinued operations are different from continuing flows. Ms Chagnaadorj's research sought to provide empirical evidence to support this assumption. The findings showed discontinued operations, particularly when splitting into gains and losses from discontinued operations, are useful to predict a company's future profitability. Furthermore, results showed losses from discontinued operations are opportunistically used to manipulate core earnings. Avoidance of reporting losses and earnings decreases under IFRS, when firms report discontinued operations frequently, and the amount of losses is high. Ms Chagnaadorj's research could assist the International Accounting Standards Board in deciding whether to report discontinued operations separately in statements of comprehensive income.

Supervisors
Professor Michael Bradbury
Professor Borhan Bhuiyan