Search results

Examines the various brand asset recognition methods used by the accounting profession, within their existing rules, to highlight, first, the restrictive nature of a brand asset’s current attachment to purchased goodwill and, second, the restrictive requirement for brand asset recognition to be derived solely from a “transaction or event”. Then examines the latest rule change, FRS10, to assess whether the recognition of brand assets is likely to remain restrictive in the future. It concurs with Murphy’s view that brand asset recognition on the balance still continues to be an accounting exercise which is “fudged”.

This study aims to examine the impact of the 2008-2009 global financial crisis (GFC) on Australian firms' compliance with IFRS 36/AASB 136 for goodwill impairment testing. It also examines the factors associated with the cross-sectional variations in the compliance levels.

Based on a survey of disclosure notes in companies' annual reports, firm-level compliance scores were developed and further analysed applying quantitative statistical methods.

The findings suggest that firms' compliance has increased during the GFC compared to the PCP. There was no significant intra-period change in the compliance levels during the PCP. Firms belonging to goodwill intensive industries show greater compliance levels than firms in other industries. Audit quality is also a significant determinant of firms' compliance with IFRS for goodwill impairment testing. Goodwill intensity is a significant determinant of firms' compliance level during the GFC but not during the PCP. Firm size is associated with the compliance levels when the industry effects are not controlled for. When the industry effects are controlled for, the effect of size on firms' compliance levels disappears. Profitability is also associated with firms' compliance with IFRS for goodwill impairment testing. However, firms' leverage ratio is not significantly associated with compliance levels.

This is the first known study to examine the issue of compliance with IFRS for goodwill impairment testing in the context of the GFC and the PCP.

The purpose of this study is to examine the impact of controlling shareholders’ share pledging on goodwill impairment.

This study empirically investigates the effect of controlling shareholders’ share pledging on both the decision and amount of goodwill impairment for Chinese listed firms from 2007 to 2017.

This study finds that the proportion of controlling shareholders’ share pledging is negatively related to both impairment decisions and amounts; these negative relationships are intensified when firms face high stock price crash risks. In addition, the empirical results show that firms with larger share pledging are less likely to recognize goodwill impairment or are likely to record relatively smaller impairment amounts when they are followed by fewer financial analysts.

Most of the relevant literature has focused on managers’ behaviors toward goodwill impairments, while less attention has been given to goodwill impairments from the perspective of controlling shareholders. In fact, controlling shareholders may have strong incentives to protect their control rights when they exercise disproportionate control rights, especially in China. Given the high ownership concentration, prior studies may not have adequately explained the agency problem of controlling shareholders in goodwill impairment. This study uses share pledging as a case to fill this gap. Specifically, it investigates whether both goodwill impairment decisions and amounts are affected by controlling shareholders’ share pledging.

The purpose of this paper is to empirically investigate the effects of competence and goodwill trust on knowledge creation and the moderating effects of legal inadequacy on those relationships.

A questionnaire survey was used to collect data from 196 research and development alliances in China. Hierarchical moderated regression was used to test the research hypotheses.

The authors find that competence trust has a positive and linear relationship with knowledge creation while goodwill trust has an inverted U-shaped relationship with it. The results also reveal that the inverted U-shaped relationship between goodwill trust and knowledge creation is stronger when legal inadequacy is high, while the impact of competence trust on knowledge creation is not influenced by legal inadequacy.

The findings provide insights into the distinctive effects of competence and goodwill trust on knowledge creation in partnerships, deepening current understandings of the bright and dark sides of inter-firm trust. This study also clarifies the influences of legal inadequacy on the effectiveness of competence and goodwill trust, which enhances existing knowledge about the impact of legal systems on the relationships between inter-firm trust and knowledge management.

The purpose of this paper is to highlight the salient features of the new accounting standards on impairment of goodwill and their practical applications.

To ascertain the research gap, the existing literatures on the subject were critically reviewed and analysed. Objectives were set to identify the significant indicators of goodwill impairment. The areas covered include business combination and goodwill impairment, effects of new standards and current practices of goodwill impairment in the UK, etc.

Goodwill is a unique intangible asset in that its cost cannot be directly associated with any specifically identifiable item and is not separable from the company as a whole. Well planned strategies for preventing goodwill impairment with long‐term perspective would contribute fruitful results.

This study provides awareness to the readers about the strategies in dealing with goodwill impairment.

The purpose of this paper is to investigate how fair value reporting and increased managerial discretion under the new goodwill accounting affect the asymmetric timeliness of earnings;, i.e. accounting conservatism.

Various empirical models are applied to a sample of 11,034 firms. To capture a cross‐sectional variation in asymmetric timeliness of earnings, Kahn and Watts' C_Score is adopted.

It is found that financial reporting for firms with purchased goodwill has become more conservative after the enactment of the new standard. However, once an increase in conservatism that is not attributable to new goodwill accounting is controlled for, it is found that accounting earnings for firms with purchased goodwill become less conservative.

The results should be interpreted with caution, because the effect of concurrent events other than the adoption of SFAS 142 on reported earnings is not perfectly controlled.

The results of this paper support Watts' assertion that new goodwill accounting impairs accounting earnings' ability to reflect the economic earnings in a timely manner, but these results should be interpreted with caution, as the main objective of goodwill accounting is not to improve accounting conservatism.

This paper makes a timely contribution to the debate of fair value accounting by focusing on the impact of SFAS 142 on the asymmetric timeliness of earnings. By employing all available firms with purchased goodwill balances rather than relying on firms that report impairment losses, our research design better captures the impact of SFAS 142 on financial reporting.

In the process of harmonizing International Accounting Standards (IAS/IFRS), scholars and standard setters still need to overcome unresolved issues related to both goodwill duration and accounting recognition. This paper aims to compare the academic background on goodwill with current IAS. Specifically, the goal is to criticize existing practices and advance a revision of accounting for goodwill.

The paper is based on a review of the relevant literature on notions, theories and accounting approaches on goodwill and on an investigation of IAS/IFRS on accounting for goodwill. By critically integrating literature and practices, the authors provide implications for a revision of IAS.

The findings show the two main internally coherent theoretical approaches and the incoherence in current goodwill accounting standards. The paper contributes to the debate on accounting for goodwill by suggesting new conceptual arguments in relation to the controversies related to its accounting treatment.

The findings offer insights and guidelines that can help standard setters revise current accounting standards. Inter alia, standards setters should revisit issues related to goodwill evaluation and record limitations in future debates to find better solutions.

This study shows the incoherence of current accounting standards. Furthermore, the findings contradict the general opinion that, in current IAS, goodwill can be recognized only if acquired in business combinations and not if internally generated. Thereby, the authors suggest to shift the international accounting standards board focus from the preference between amortization and impairment to the coherence of goodwill accounting approaches.

Purchased goodwill conforms to the current accounting definitions of an asset. However, as the descriptive framework contained within this paper will show, purchased goodwill is not an asset and, therefore, should not be shown on the balance sheet. This would not necessarily matter, from a marketing viewpoint, was it not for the linkage of brand asset recognition to purchased goodwill asset recognition. Currently, the recognition of a purchased goodwill asset tends to be a prerequisite for the recognition of a brand asset extracted from it. If it can be shown that purchased goodwill is not an asset, then the prerequisite disappears. The widespread recognition of brand assets is then unfettered by its association with purchased goodwill. Weakening the basis for the recognition of a purchased goodwill asset is an important first step in encouraging the accounting profession to devise new ways of dealing with the different kinds of intangible assets that are becoming paramount in the governance of companies.

Accounting standards for goodwill may intensify the agency conflict. Since auditors evaluate intangible asset valuations, this study examines to what extent being an auditor (including Big 4 auditors) and being female as indicators of professional skepticism and conservatism predict accounting professionals' critical views of goodwill accounting under US GAAP.

Statistical analyses of a survey of accounting professionals in the Pacific Northwest region of the United States.

The respondents' views are dispersed from trust in GAAP to views reflecting management opportunism in goodwill accounting. While being an auditor (including Big 4 auditors) does not predict a critical perception, being a female auditor is correlated with critical views to some extent.

The survey was carried out in a limited geographical area and personal contacts were used to maximize the response rate, which may limit generalizability.

Standard setters can use the results to learn how practitioners perceive the current accounting standards for goodwill. The results provide users and preparers knowledge about potential pitfalls of goodwill accounting. Preparers could increase transparency to alleviate user concerns regarding managerial opportunism in goodwill accounting.

This paper extends the IFRS-based literature exploring practitioners' perceptions of accounting standards by focusing on goodwill accounting in the US GAAP environment. This study also contributes to the auditing literature by providing further evidence on how gender moderates an auditor's perception of accounting standards.

Advocates of greater intangible asset reporting frequently make the criticism that the published financial statements of companies do not adequately reflect the value of intangible assets and hence provide potentially misleading information to the users of the financial statements. The purpose of this paper is to evaluate whether since the introduction of “fair value accounting,” particularly in respect of the treatment of acquired “goodwill” shown on consolidated balance sheets, these criticisms retain any validity. The paper investigates the extent to which it can be confidently asserted that the recognition of acquired goodwill and the post‐acquisition rules for recognizing any goodwill “impairment” has materially improved the information available to the users of financial statements and/or whether these developments have resulted largely in providing self‐interested managers with greater opportunities to engage in earnings and balance sheet manipulations that are of doubtful value to users.

The paper critically reviews the rules and the intentions of accounting policy makers in relation to fair value acquisition accounting and evaluates the empirical evidence relating to corporate behavior in this area.

Despite the presumed benefits associated with fair value accounting, it is shown that in practice managerial self‐interests and earnings management concerns appear to motivate many goodwill impairment decisions. However, as investors and analysts have always had the option to adjust, or indeed totally ignore, reported accounting numbers it is far less certain whether this reporting behavior actually misleads users or significantly reduces the information content (reliability and relevance) of the financial statements.

The paper provides an overview of the accounting treatment and reporting consequences associated with the introduction of fair value accounting in respect of acquired goodwill.