The Effect of COVID-19 on Impairment Losses of Tangible and Intangible Assets

[Purpose] This study analyzes the impact of COVID-19 on impairment losses of tangible and intangible assets. We also observed whether this impact differed between the KOSPI and the KOSDAQ market and what results were seen under the characteristics of companies that were severely affected by COVID-19. [Methodology] The regression model and mean difference test are used with KSE and KOSDAQ listed firms. And the period of this research is from 2017 to 2022. [Findings] We found that impairment losses on tangible assets increased from the second year of COVID-19, and impairment losses on intangible assets decreased from the first year of COVID-19 period. As a result of comparison by market, COVID-19 more severely affected tangible and intangible assets in the KOSDAQ market. However, in situations where the profit and loss structure was extremely poor, significant changes in the recognition of tangible and intangible impairment losses were not observable pre and post COVID-19. [Implications] By analyzing whether there are changes in the recognition of tangible and intangible impairment losses between pre and post COVID-19, unlike previous economic crises, we can clarify the phenomenon in special crisis situations caused by external factors such as infectious diseases. It can provide meaningful implications for the decision-making of various stakeholders as well as policymakers in charge of supervisory guidelines.