GOODWILL REPORTING IN CORPORATE ACQUISITIONS: THE EFFECTS OF MANAGERIAL DISCRETION UNDER THE NEW ACCOUNTING RULES

Carlotta D'Este, Ilaria Galavotti*, Marina Carabelli

*Autore corrispondente per questo lavoro

Risultato della ricerca: Contributo in rivistaArticolo in rivista

Abstract

Goodwill is a critical issue in the accounting of corporate restructuring activities in terms of both purchase price allocation in corporate acquisitions and the subsequent write-downs. Although the Financial Accounting Standards Board (FASB) and International Accounting Standards Board (IASB) new accounting standards provide a reference point for goodwill recognition, the complexity of fair value adjustments and the extensive subjectivity involved in assessing goodwill still make its allocation and the impairment-only approach limitedly transparent. Therefore, this study explores the impact of IFRS 3 (International Financial Reporting Standard 3) on management discretion in goodwill reporting. From a methodological standpoint, the hypotheses are tested on a sample of 68 acquisitions executed by Italian-listed acquirers in the 2012–2020 period. Our results confirm the potential for managerial opportunistic behavior in light of the signaling role of goodwill for investors.
Lingua originaleEnglish
pagine (da-a)72-83
Numero di pagine12
RivistaCORPORATE OWNERSHIP & CONTROL
Volume2023
DOI
Stato di pubblicazionePubblicato - 2023

Keywords

  • Goodwill
  • Accounting discretion
  • IFRS 3
  • Fair value accounting
  • Impairment losses

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