Did the goodwill accounting standard impose material economic consequences on Australian acquirers?

Article

James, Kieran, How, Janice and Verhoeven, Peter. 2008. "Did the goodwill accounting standard impose material economic consequences on Australian acquirers?" Accounting and Finance. 48 (4), pp. 625-647. https://doi.org/10.1111/j.1467-629x.2007.00246.x
Article Title

Did the goodwill accounting standard impose material economic consequences on Australian acquirers?

ERA Journal ID19059
Article CategoryArticle
AuthorsJames, Kieran (Author), How, Janice (Author) and Verhoeven, Peter (Author)
Journal TitleAccounting and Finance
Journal Citation48 (4), pp. 625-647
Number of Pages23
Year2008
PublisherJohn Wiley & Sons
Place of PublicationAustralia
ISSN0810-5391
1467-629X
Digital Object Identifier (DOI)https://doi.org/10.1111/j.1467-629x.2007.00246.x
Web Address (URL)http://www3.interscience.wiley.com/cgi-bin/fulltext/120174085/PDFSTART
Abstract

This research explores the empirical association between takeover bid premium and acquired (purchased) goodwill, and tests whether the strength of the association changes after the passage of approved accounting standard AASB 1013 in Australia in 1988. AASB 1013 mandated capitalization and amortization of acquired goodwill to the income statement over a maximum period of 20 years. We use regressions to assess how the association between bid premium and acquired goodwill varies in the pre-AASB and post-AASB 1013 periods after controlling for confounding factors. Our results show that reducing the variety of accounting policy options available to bidder management after an acquisition
results in a systematic reduction in the strength of the association between premium and goodwill.

Keywordsaccounting choice; bid premium; intangible assets; purchased goodwill; signalling theory
ANZSRC Field of Research 2020350101. Accounting theory and standards
350711. Organisational planning and management
480699. Private law and civil obligations not elsewhere classified
Public Notes

File reproduced in accordance with the copyright policy of the publisher/author.

Byline AffiliationsSchool of Accounting, Economics and Finance
University of Auckland, New Zealand
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