Reporting goodwill: are the new accounting standards consistent with market valuations?

Reporting goodwill: are the new accounting standards consistent with market valuations? In 2001, the Financial Accounting Standards Board (FASB) issued a standard that eliminated the amortization of goodwill and instead requires that it be tested annually for impairment. This study examines the appropriateness of the elimination of systematic goodwill amortization by testing market valuations of goodwill. While only weak support for the initial impairment of goodwill is found, strong evidence of subsequent impairment is found. These results support the elimination of goodwill amortization by accounting regulators. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Business Research Elsevier

Reporting goodwill: are the new accounting standards consistent with market valuations?

Journal of Business Research, Volume 58 (10) – Oct 1, 2005

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Publisher
Elsevier
Copyright
Copyright © 2004 Elsevier Inc.
ISSN
0148-2963
eISSN
1873-7978
D.O.I.
10.1016/j.jbusres.2004.05.006
Publisher site
See Article on Publisher Site

Abstract

In 2001, the Financial Accounting Standards Board (FASB) issued a standard that eliminated the amortization of goodwill and instead requires that it be tested annually for impairment. This study examines the appropriateness of the elimination of systematic goodwill amortization by testing market valuations of goodwill. While only weak support for the initial impairment of goodwill is found, strong evidence of subsequent impairment is found. These results support the elimination of goodwill amortization by accounting regulators.

Journal

Journal of Business ResearchElsevier

Published: Oct 1, 2005

References

  • Earnings management by acquiring firms in stock for stock mergers
    Erickson, M.; Wang, S.W.
  • An empirical investigation if stock market valuation of corporate projected pension liabilities
    Gopalakrishnan, V.; Sugrue, T.F.
  • The relation between accounting goodwill numbers and equity values
    Jennings, R.; Robinson, J.; Thompson, R.B.; Duvall, L.
  • Do managerial objectives drive bad acquisitions?
    Morck, R.; Shleifer, A.; Vishny, R.
  • US evidence on bank takeover motives: a note
    Zhang, H.

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