Did the Goodwill Accounting Standard Impose Material Economic Consequences on Australian Acquirers?

23 Pages Posted: 3 Nov 2008

See all articles by Kieran James

Kieran James

affiliation not provided to SSRN

Janice C. Y. How

Queensland University of Technology; Financial Research Network (FIRN)

Peter Verhoeven

Queensland University of Technology - QUT Business School; Financial Research Network (FIRN)

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.

Suggested Citation

James, Kieran and How, Janice C. Y. and Verhoeven, Peter, Did the Goodwill Accounting Standard Impose Material Economic Consequences on Australian Acquirers?. Accounting & Finance, Vol. 48, No. 4, pp. 625-647, December 2008. Available at SSRN: https://ssrn.com/abstract=1291178 or http://dx.doi.org/10.1111/j.1467-629X.2007.00246.x

Kieran James

affiliation not provided to SSRN

Janice C. Y. How (Contact Author)

Queensland University of Technology ( email )

2 George Street
Brisbane, Queensland 4000
Australia

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

Peter Verhoeven

Queensland University of Technology - QUT Business School ( email )

GPO Box 2434
Brisbane, Queensland 4001
Australia

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

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