Goodwill Impairment : : An Empirical Investigation of Write-Offs under SFAS 142.

• Superior document: Bochumer Beitraege Zur Unternehmensfuehrung Series ; v.70
• Author: Sellhorn, Thorsten.
• Place / Publishing House: Frankfurt a.M. : : Peter Lang GmbH, Internationaler Verlag der Wissenschaften,, 2004.; Ã2004.
• Year of Publication: 2004
• Edition: 1st ed.
• Language: English
• Series: Bochumer Beitraege Zur Unternehmensfuehrung Series
• Physical Description: 1 online resource (358 pages)

Table of Contents

• Cover
• List of abbreviations
• List of symbols
• List of figures
• List of tables
• 1 Introduction
• 1.1 Problem
• 1.2 Research question and contribution
• 1.3 Outline
• 2 The goodwill debate
• 2.1 Chapter overview
• 2.2 The concept of goodwill
• 2.3 Main issues
• 2.3.1 Pooling and purchase methods illustrated
• 2.3.2 Arguments raised in the discussion
• 2.3.2.1 Conceptual issues
• 2.3.2.2 Status quo of accounting rules
• 2.3.2.2.1 United States
• 2.3.2.2.2 International Accounting Standards
• 2.3.2.2.3 Germany
• 2.3.2.3 Practical issues
• 2.3.3 Theoretical analysis of arguments raised
• 2.4 Empirical evidence relevant to the goodwill debate
• 2.4.1 Overview
• 2.4.2 Research questions
• 2.4.3 Direct evidence
• 2.4.3.1 Survey evidence
• 2.4.3.2 Determinants of goodwill write-offs
• 2.4.3.3 Determinants of other goodwill-related financial reporting decisions
• 2.4.3.3.1 Influence of goodwill accounting rules on acquisition premiums
• 2.4.3.3.2 Determinants of purchase price allocation decisions
• 2.4.3.3.3 Determinants of amortization parameters
• 2.4.3.4 Determinants of the purchase/pooling choice
• 2.4.3.4.1 Factors influencing the purchase/pooling choice
• 2.4.3.4.2 Managers' willingness to "purchase" the pooling method
• 2.4.3.5 Managers' lobbying for goodwill-related accounting rules
• 2.4.4 Indirect evidence
• 2.4.4.1 Experimental evidence
• 2.4.4.2 Information content of goodwill write-offs
• 2.4.4.3 Value relevance of goodwill book value and amortization
• 2.4.4.3.1 Balance sheet approach
• 2.4.4.3.2 Combined balance sheet and income statement approaches
• 2.4.4.3.3 Income statement approach
• 2.4.4.3.4 International comparison studies
• 2.4.4.4 Market reactions to the purchase/pooling decision
• 2.4.4.5 Market reactions to mandated changes in accounting rules for business combinations.
• 2.5 Summary and implications
• 3 Empirical research on discretionary asset write-offs
• 3.1 Chapter overview
• 3.2 Discretionary asset write-offs as a subject of accounting research
• 3.3 Determinants of write-off behavior
• 3.3.1 Earnings management as an explanatory factor
• 3.3.1.1 Earnings management defined
• 3.3.1.2 Overview of the earnings management literature
• 3.3.1.3 Discretionary asset write-offs and earnings management
• 3.3.2 Theory, hypotheses, and main findings
• 3.3.2.1 Overview
• 3.3.2.2 Economic factors
• 3.3.2.3 Economic-consequences incentives
• 3.3.2.3.1 Intellectual roots: Positive accounting theory
• 3.3.2.3.2 Application to financial reporting decisions
• 3.3.2.3.3 Accounting earnings-based compensation schemes
• 3.3.2.3.4 Accounting-based debt covenants in lending agreements
• 3.3.2.3.5 Political costs
• 3.3.2.3.6 Discriminating between competing hypotheses
• 3.3.2.4 Capital market-related incentives
• 3.3.2.4.1 Theoretical fundamentals
• 3.3.2.4.2 Management's interest in the firm's stock price
• 3.3.2.4.3 Maximizing earnings
• 3.3.2.4.4 Income smoothing
• 3.3.2.4.5 Target accounting
• 3.3.2.4.5.1 Prevalence of target accounting
• 3.3.2.4.5.2 Importance of earnings targets
• 3.3.2.4.5.3 Cross-sectional differences in target-accounting behavior
• 3.3.2.4.5.4 Market reactions to target accounting
• 3.3.2.4.6 Big bath
• 3.3.2.4.7 Rating
• 3.3.2.4.8 Specific considerations regarding accounting changes and other transitory earnings components
• 3.3.2.5 Factors restricting management discretion
• 3.4 Financial statement users' view of discretionary asset write-offs
• 3.4.1 Information perspective of financial reporting
• 3.4.2 Research approaches
• 3.4.3 Main findings
• 3.4.3.1 Information content studies
• 3.4.3.2 Association studies
• 3.5 Summary and implications.
• 4 Discretionary properties of the impairment-only approach
• 4.1 Chapter overview
• 4.2 Main provisions of SFAS 141 and 142
• 4.3 Frequency
• 4.3.1 Annual testing
• 4.3.1.1 Rule
• 4.3.1.2 Exception
• 4.3.2 Unscheduled testing when circumstances warrant
• 4.4 Level of aggregation
• 4.5 Existence
• 4.5.1 Reporting unit fair value
• 4.5.1.1 Quoted market prices
• 4.5.1.2 Present value techniques
• 4.5.1.2.1 Measuring fair value as the objective
• 4.5.1.2.2 Measurement techniques
• 4.5.1.3 Multiples
• 4.5.1.4 Preliminary conclusion
• 4.5.2 Carrying value of reporting unit net assets
• 4.5.2.1 Allocating assets and liabilities
• 4.5.2.2 Allocating goodwill
• 4.5.3 Disposal
• 4.6 Measurement
• 4.6.1 Fair value of reporting unit net assets
• 4.6.1.1 Fictitious purchase price allocation
• 4.6.1.2 Recognition
• 4.6.1.3 Measurement
• 4.6.2 Inclusion of estimates
• 4.7 Transition
• 4.7.1 Effective date and initial application
• 4.7.2 Transitional impairment test
• 4.7.3 Transitional presentation and disclosures
• 4.7.4 Reclassification of goodwill and intangible assets
• 4.8 Intermediate results
• 5 Empirical investigation of write-off determinants
• 5.1 Chapter overview
• 5.2 Hypothesis development
• 5.2.1 Overview
• 5.2.2 Economic factors
• 5.2.3 Financial reporting incentives
• 5.2.3.1 Economic-consequences incentives
• 5.2.3.1.1 Compensation
• 5.2.3.1.2 Debt covenants
• 5.2.3.1.3 Political costs
• 5.2.3.2 Capital market-related incentives
• 5.2.3.2.1 Target accounting
• 5.2.3.2.1.1 General decision model
• 5.2.3.2.1.2 Firms exceeding earnings targets
• 5.2.3.2.1.3 Firms falling short of earnings targets
• 5.2.3.2.2 Rating
• 5.2.4 Control variables
• 5.3 Research design and descriptive information
• 5.3.1 Variable definition
• 5.3.2 Sample selection
• 5.3.3 Descriptive statistics and comparative analyses.
• 5.4 Regression analysis
• 5.4.1 Methods employed in studies of write-off determinants
• 5.4.1.1 Qualitative dependent variables: The write-off decision
• 5.4.1.2 Limited dependent variables: The write-off amount
• 5.4.2 Summary of hypotheses
• 5.4.3 Analysis of the write-off decision
• 5.4.3.1 Full-sample test
• 5.4.3.2 Tests for robustness
• 5.4.3.3 Sub-sample tests
• 5.4.4 Analysis of the write-off amount
• 5.4.4.1 Full-sample test
• 5.4.4.2 Tests for robustness
• 5.4.4.3 Sub-sample tests
• 5.5 Inferences
• 5.5.1 Summary of findings
• 5.5.2 Limitations
• 6 Conclusion
• Appendix
• List of references
• List of accounting pronouncements and legal provisions.