Do Asset Write-Offs Matter? Not Really
— July 3, 2020
By Baruch Lev
This is not an isolated event. We are now witnessing an avalanche of asset write-offs by oil companies (BP (BP), announcing earlier this month a $13 billion to $17.5 billion write-off, and Chevron (CVX), an $11 billion write-off in December 2019). Asset write-offs in other industries, reflecting worsening of the business environment, are also announced, though less frequently than in oil and gas.
What is the relevance of such asset write-offs, often of staggering amounts, to investors? Is it a signal to dump the stock, as some Shell investors did on June 30?
Read the full Seeking Alpha article.
Baruch Lev is the Philip Bardes Professor of Accounting and Finance.