Alexander Lahmann, Lena Siggelkow, Henning Zülch

• We analyze under which situations it is optimal to opportunistically delay a fi xed asset write-off and when transparent reporting of write-offs is optimal. We apply a simplifi ed real options approach to find an answer to this question. Therefore, we analyze two settings, one of which does not allow for reporting discretion while the other one does. If there is no reporting discretion the expected carrying amount can be refl ected by reducing the carrying amount after depreciation by the pay-off of a put option, with the carrying amount as the strike price and the recoverable amount as the underlying. If reporting discretion exists regarding the reporting of write-offs, the payoff the fi rm earns when the write-off is delayed can be interpreted as the value of a barrier option with the carrying amount as the barrier and the recoverable amount as the underlying. We fi nd that the probability that write-offs are delayed increases with the benefits of earnings management and decreases with the costs of earnings management and the benefits of transparent reporting.