Positive accounting theory and institutional theory are used in
conjunction in order to explain accounting choice. The theory is applied on
IAS 36 (impairment of assets), and tested on a sample of listed Swedish
corporations. We find that the choice is mainly induced by agency and general
business factors and to a slighter degree by institutional factors. Especially, we
find that institutional influence will be stronger when it is in the interest of
important stakeholders; that impairments can be used as a mean of signalling
trust to absent owners and that the institutional element of tradition cannot be
tested separately from the agency element of opportunism.