Table 2 Principal component analysis... | Emerald Publishing

Table 2

Principal component analysis

Component	Alpha	Lambda	Variance explained (%)	Component loading
Reliable GAAP (REL_GAAP)	0.653	2.840	0.166
In my opinion, valuation based on expected cash flows in US GAAP financial statements is a good practice				0.661
Determining the fair value of assets in the balance sheet is a good practice				0.627
The rules of goodwill accounting under US GAAP improve information content of financial statements				0.754
Impairment testing that complies with US GAAP is reliable				0.643
Unreliable goodwill (UNREL_GW)	0.616	2.284	0.164
Valuation based on estimates made by management in US GAAP financial statements is not reliable				0.556
Companies are afraid of how investors react to goodwill impairment charges				0.612
Impairment testing enables too much discretion in valuation				0.754
The rules of goodwill accounting under US GAAP may lead to inconsistencies in the financial information provided in financial statements				0.760
Increasing earnings management (INC_EM)	0.647	1.199	0.159
The rules of goodwill accounting under US GAAP enable earnings management				0.794
A goodwill impairment loss is recognized when the reported earnings would have been negative in any case				586
The rules of goodwill accounting under US GAAP lead to increasing earnings management				0.769
Opportunistic management (OPP_MGMT)	0.705	1.106	0.152
Management does not recognize a goodwill impairment loss if earnings have an impact on executive compensation				0.826
A CEO is unwilling to take a goodwill impairment charge if it worsens his/her position in the company				0.840

Component	Alpha	Lambda	Variance explained (%)	Component loading
Reliable GAAP (REL_GAAP)	0.653	2.840	0.166
In my opinion, valuation based on expected cash flows in US GAAP financial statements is a good practice				0.661
Determining the fair value of assets in the balance sheet is a good practice				0.627
The rules of goodwill accounting under US GAAP improve information content of financial statements				0.754
Impairment testing that complies with US GAAP is reliable				0.643
Unreliable goodwill (UNREL_GW)	0.616	2.284	0.164
Valuation based on estimates made by management in US GAAP financial statements is not reliable				0.556
Companies are afraid of how investors react to goodwill impairment charges				0.612
Impairment testing enables too much discretion in valuation				0.754
The rules of goodwill accounting under US GAAP may lead to inconsistencies in the financial information provided in financial statements				0.760
Increasing earnings management (INC_EM)	0.647	1.199	0.159
The rules of goodwill accounting under US GAAP enable earnings management				0.794
A goodwill impairment loss is recognized when the reported earnings would have been negative in any case				586
The rules of goodwill accounting under US GAAP lead to increasing earnings management				0.769
Opportunistic management (OPP_MGMT)	0.705	1.106	0.152
Management does not recognize a goodwill impairment loss if earnings have an impact on executive compensation				0.826
A CEO is unwilling to take a goodwill impairment charge if it worsens his/her position in the company				0.840

Note(s): N = 271; Rotation: Promax; Normalization: Kaiser; Bartlett's test of sphericity: χ² = 668.536 (p-value < 0.001); Kaiser–Meyer–Olkin measure of sampling adequacy: 0.720