Download or read book Goodwill Impairment Charges Under SFAS 142 written by Lale Guler and published by . This book was released on 2010 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This study examines factors that influence managers' choice to recognize goodwill impairment under Statement of Financial Accounting Standards No. 142 (SFAS 142). The debate surrounding SFAS 142's effectiveness centered on whether the managerial discretion allowed by the standard could lead to biased decisions in managers' determination of goodwill impairment. I use a conditional logistic regression to compare 130 firms that did recognize the existing impairment losses (write-off firms) to a control sample of 130 matching firms that did not recognize the existing impairment losses (no write-off firms). I find that the likelihood of recognizing the existing impairment losses significantly decreases when the managers have sizable holdings of in-the-money stock options. On the other hand, the likelihood of recognizing the existing impairment losses significantly increases when firms have stronger corporate governance, as measured by percentage of outside directors, percentage of outside directors' ownership, number of busy directors, and separation of CEO and Chair titles. Additionally, I find that during the period leading up to the SFAS 142 write-off, there have been more favorable changes in corporate governance structures of the writeoff firms, compared to that of no write-off firms. These favorable changes in governance structures occurred to a greater extent in firms that have delayed the recognition of existing impairment losses to the sample period compared to the firms that have been recognizing the write-offs on a timely basis. These results are consistent with the notion that favorable changes in corporate governance induce firms to take SFAS 142 impairment losses, which managers have avoided taking in the prior period. Overall, the results imply that managerial incentives do affect the implementation of standards that expand managerial discretion and highlight the importance of corporate boards in the monitoring of discretion allowed by such standards.
Download or read book Goodwill Impairment Charges Under NZ 36 written by Jega Balachandra and published by . This book was released on 2012 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book The Information Content and Timeliness of SFAS 142 Goodwill Impairments written by Tamas Papp and published by . This book was released on 2016 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: With the introduction of SFAS 142 and the impairment of goodwill, the FASB aimed to improve financial reporting by producing accounting numbers that reliably reflect the underlying economics of the asset. The board thereby predicted that write-offs under the new standard will provide investors with useful and timely information. The evidence in this thesis shows that the expectations of the FASB are not met. First, goodwill impairments do not trigger significant market reactions, indicating that they convey no new information about the asset. Second, stock returns in the year preceding a goodwill impairment are associated with the upcoming accounting loss, which implies that the formal recognition of write-offs lags at least one year behind the real economic deterioration of the asset. Furthermore, it is showed that investors are able to anticipate goodwill impairments using fundamental and market indicators, particularly the relative magnitude of goodwill and stock returns. Overall, the evidence provides support for the critics of SFAS 142, who find that managers opportunistically delay the announcement of goodwill write-offs motivated by their private incentives.
Download or read book Advances in Quantitative Analysis of Finance and Accounting New Series 2011 Vol 9 written by Cheng F. Lee and published by Center for PBBEFR & Airiti Press. This book was released on 2011-10-01 with total page 339 pages. Available in PDF, EPUB and Kindle. Book excerpt: Advances in Quantitative Analysis of Finance and Accounting (New Series) is an annual publication designed to disseminate developments in the quantitative analysis of finance and accounting. The publication is a forum for statistical and quantitative analyses of issues in finance and accounting as well as applications of quantitative methods to problems in financial management, financial accounting, and business management. The objective is to promote interaction between academic research in finance and accounting and applied research in the financial community and the accounting profession.
Download or read book Goodwill Impairment Losses Economic Impairment Earnings Management and Corporate Governance written by Tonny Stenheim and published by . This book was released on 2016 with total page 20 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper investigates the association between goodwill impairment losses and proxies of economic impairment, earnings management incentives and corporate governance mechanisms. The results demonstrate significant associations between proxies of economic impairment and goodwill impairment losses, suggesting that impairment losses in goodwill to some extent reflect economic impairment. Some evidence, however, suggests that impairment losses are associated with earnings management incentives. Corporate governance mechanisms are not found to play a significant role in accounting for impairment losses in goodwill. The empirical results are based on observations from the 288 largest firms listed at the London Stock Exchange over the fiscal years 2005 to 2009.
Download or read book Goodwill Impairment written by Thorsten Sellhorn and published by Peter Lang Publishing. This book was released on 2004-01-01 with total page 323 pages. Available in PDF, EPUB and Kindle. Book excerpt: In 2001, goodwill amortization in the US was eliminated in favor of an impairment-only approach, which, according to critics, gives managers vast discretion and opportunities for earnings management. Prior research suggests that discretionary asset write-offs are associated with economic factors and managers' financial reporting objectives. Based on a systematic literature review, this study investigates for a comprehensive sample of US firms the determinants of goodwill write-off behavior. Regression analysis shows that write-off behavior is significantly explained by firms' economic properties. Only in large, high-profile firms, incentives appear to be significant determinants. These findings suggest that the impairment-only approach does capture goodwill impairment at least to some extent."
Download or read book Facts and Issues About Goodwill Impairment Losses in SFAS No 142 Adoption Year written by Kang Cheng and published by . This book was released on 2008 with total page 16 pages. Available in PDF, EPUB and Kindle. Book excerpt: For most companies, fiscal year 2002 was the adoption year for Statement of Financial Accounting Standard (SFAS) No. 141: Business Combinations and No. 142: Goodwill and Other Intangible Assets. This article analyzes financial statements reported under the new rules and reaches the following conclusions: 1). In the adoption year, the impacts on reported earnings can be deep, but uneven across firms; some companies show dramatic negative impacts while most companies show mild positive impacts. 2). Measurement and disclosure of goodwill's fair value, and the basis for impairment losses, when necessary, becomes more technical and more demanding on statement users. 3). Goodwill fair value impairment losses take place across industries and do not seem to be related to industry economic performance. Overall, under the new rules, goodwill as an asset on the accounting book is more challenging and less predictable.
Download or read book Evidence on the Use of Unverifiable Estimates in Required Goodwill Impairment written by Karthik Ramanna and published by . This book was released on 2009 with total page 48 pages. Available in PDF, EPUB and Kindle. Book excerpt: SFAS 142 requires managers to estimate the current fair value of goodwill to determine goodwill write-offs. In promulgating the standard, the FASB predicted managers will, on average, use the fair value estimates to convey private information on future cash flows. The current fair value of goodwill is unverifiable because it depends in part on management's future actions (including managers' conceptualization and implementation of firm strategy). Thus, agency theory predicts managers will, on average, use the discretion in SFAS 142 consistent with private incentives. We test these hypotheses in a sample of firms with market indications of goodwill impairment. Our evidence, while consistent with some agency-theory derived predictions, does not confirm the private information hypothesis.
Download or read book Dissertation Abstracts International written by and published by . This book was released on 2007 with total page 756 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Goodwill Impairment written by Thorsten Sellhorn and published by Peter Lang Pub Incorporated. This book was released on 2004 with total page 323 pages. Available in PDF, EPUB and Kindle. Book excerpt: In 2001, goodwill amortization in the US was eliminated in favor of an impairment-only approach, which, according to critics, gives managers vast discretion and opportunities for earnings management. Prior research suggests that discretionary asset write-offs are associated with economic factors and managers_ financial reporting objectives. Based on a systematic literature review, this study investigates for a comprehensive sample of US firms the determinants of goodwill write-off behavior. Regression analysis shows that write-off behavior is significantly explained by firms_ economic properties. Only in large, high-profile firms, incentives appear to be significant determinants. These findings suggest that the impairment-only approach does capture goodwill impairment at least to some extent.
Download or read book Accounting Discretion and Purchase Price Allocation After Acquisitions written by Ivy Zhang and published by . This book was released on 2007 with total page 58 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study investigates acquirers' allocation of purchase price between goodwill and identifiable intangible assets upon the completion of acquisitions. SFAS 142 replaces goodwill amortization with periodic impairment tests based on fair value estimates, while most identifiable intangible assets are still amortized over finite useful lives. As a result of the new differential accounting treatment, we predict and find that managers allocate more purchase price to goodwill post SFAS 142 to reduce amortization expenses when they anticipate greater discretion in future goodwill assessment to avoid reporting impairment. We also find that older CEOs who likely care more about short-term accounting earnings and bonus record more goodwill to avoid amortization expenses. The results are robust to controls for the economic determinants of the allocation. The explanatory power of acquirer/CEO characteristics that capture managers' reporting incentives is greater than that of the economic determinants. In contrast, the same variables cannot explain the purchase price allocation prior to SFAS 142. The findings suggest that unverifiable accounting measures likely deviate from the underlying economics as a result of management exploiting their accounting discretion. We also explore the role of external appraisers in the post SFAS 142 period and find mixed results.
Download or read book Earnings Management written by Joshua Ronen and published by Springer Science & Business Media. This book was released on 2008-08-06 with total page 587 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book is a study of earnings management, aimed at scholars and professionals in accounting, finance, economics, and law. The authors address research questions including: Why are earnings so important that firms feel compelled to manipulate them? What set of circumstances will induce earnings management? How will the interaction among management, boards of directors, investors, employees, suppliers, customers and regulators affect earnings management? How to design empirical research addressing earnings management? What are the limitations and strengths of current empirical models?
Download or read book Government Auditing Standards 2018 Revision written by United States Government Accountability Office and published by Lulu.com. This book was released on 2019-03-24 with total page 234 pages. Available in PDF, EPUB and Kindle. Book excerpt: Audits provide essential accountability and transparency over government programs. Given the current challenges facing governments and their programs, the oversight provided through auditing is more critical than ever. Government auditing provides the objective analysis and information needed to make the decisions necessary to help create a better future. The professional standards presented in this 2018 revision of Government Auditing Standards (known as the Yellow Book) provide a framework for performing high-quality audit work with competence, integrity, objectivity, and independence to provide accountability and to help improve government operations and services. These standards, commonly referred to as generally accepted government auditing standards (GAGAS), provide the foundation for government auditors to lead by example in the areas of independence, transparency, accountability, and quality through the audit process. This revision contains major changes from, and supersedes, the 2011 revision.
Download or read book Fair Value Measurements written by International Accounting Standards Board and published by . This book was released on 2006 with total page 104 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Accounting for M A written by Amir Amel-Zadeh and published by Routledge. This book was released on 2020-04-29 with total page 331 pages. Available in PDF, EPUB and Kindle. Book excerpt: Spending on M&A has, in aggregate, grown so fast that it has even overtaken capital expenditure on increasing and maintaining physical assets. Yet McKinsey, the leading management consultancy, reports that "Anyone who has researched merger success rates knows that roughly 70% fail". The idea that businesses might be using huge and increasing sums of shareholders’ money for an activity that more often than not leads to failure calls into question the information on which M&A decisions are based. This book presents statistical studies, case material, and standard-setters’ opinions on company accounting before, during, and after M&A. It documents the manipulation of annual accounts by acquirers ahead of share for share bids, biased forecasts of post-merger earnings by bidders, and devices to flatter earnings when recording the deal. It explores the challenges for standard-setters in regulating information flows during and after M&A, and for account-users wishing to learn from financial statements how a deal has affected performance. Drawing on a wide range of international examples, this readable book is targeted not just at accounting specialists but at anyone who is comfortable reading the serious financial press, is intrigued by what is going on in the massive M&A market, and is concerned with achieving better-informed M&A. As such it might be of particular interest to business executives, lawyers, bankers, and investors involved in M&A as well as graduate students interested in researching or learning about the role of accounting in M&A.
Download or read book U S Master GAAP Guide written by Bill D. Jarnagin and published by CCH. This book was released on 2008-09 with total page 1364 pages. Available in PDF, EPUB and Kindle. Book excerpt: In a single affordable volume, U.S. Master GAAP Guide offers solutions to many complex accounting and disclosure problems by providing accountants with superior technical analysis, new insights, and practical explanations of accounting principles.
Download or read book Law and Accounting written by Lawrence A. Cunningham and published by West Academic Publishing. This book was released on 2005 with total page 792 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book is both revolutionary and traditional, using primary materials rather than author narrative. By adopting this traditional approach for law and accounting, Cunningham's new book puts the subject on par with other law school courses. This traditional "cases and materials" approach underscores how accounting standards bear earmarks of functional law. To facilitate analogical and critical engagement on par with other law school teaching books, pedagogical design follows the classic casebook method of arranging cases and materials in pairs of opposites and complements. This arrangement enables conceptualizing accounting as functional law as theoretical and analytical matters as well. This original content also illuminates transaction economics, factors associated with accounting irregularities and the lawyer's role in financial reporting.
