Fair Value Accounting for Goodwill Under IFRS: An Exploratory Study of the Comparability in France, Germany, and the United Kingdom

Abstract

Using a random sample of companies from France, Germany, and the UK (100 from each country) I examine the comparability/diversity of fair value accounting of goodwill under International Financial Reporting Standards (IFRS). I predict and find that large companies operating in an environment with a high level of investor protection are more likely to provide more disclosure on how the conduct the fair value estimation of acquired goodwill. I also predict find that investors find the accounting information from companies with high levels of disclosure more informative. In addition, I also find that companies in the financial sector are providing significantly less disclosure compared to other companies.

Keywords: Fair value, Goodwill, IFRS, France, Germany, United Kingdom

JEL Classification: M41, M44, M45, M47, K22