ARTICLE
TITLE

Cognitive Dissonance or Agency Theory, what Explains the Loss of Impairment of Goodwill?

SUMMARY

Objective: The purpose of this research is to analyze the impairment loss of goodwill in companies listed in Brasil, Bolsa, Balcão [B]3 from the perspective of Agency Theory and Cognitive Dissonance Theory.Method: We used a sample composed of Brazilian non-financial publicly traded companies listed in [B]3. The analysis was conducted through the logistic regression, considering an unbalanced panel data set for the period from 2010 to 2016.Originality/Relevance: This study uses a theory of psychology, the Cognitive Dissonance Theory, to try to explain the occurrence of goodwill impairment loss.Results: The results point to the Cognitive Dissonance Theory as the theory that explains the goodwill impairment loss, since managers tend to record a goodwill impairment loss in the current year, when there was already a loss recorded in the previous year, as a way to decrease the mental discomfort caused between their cognitions.Theoretical/Methodological contributions: It contributes to the literature in order to associate the decisions made by managers with a psychological behavioral theory that until now has not received prominence in the attempts to justify the decisions of agents. The gain from this research is also directed to investors, as it allows them to make decisions not only based on what the accounting reports say, but taking into account other aspects, such as managers’ behavior and cognitions.

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