-
Journal menu
- General information
- Editorial Board and External Reviewers
- Journal Policies
- Publication Ethics and Malpractice Statement
- Instructions for authors
- Paper reviewing
- Article processing charge
- Feedback from stakeholders
- Journal’s Open Access statement
- Order hard copies of the journal
- 50 most cited papers in the journal
Goodwill reporting in corporate acquisitions: The effects of managerial discretion under the new accounting rules
Download This Article
Carlotta D’Este 
, Ilaria Galavotti , Marina Carabelli
This work is licensed under a Creative Commons Attribution 4.0 International License.
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.
Keywords: Goodwill, Accounting Discretion, Impairment Losses, Fair Value Accounting, IFRS 3
Authors’ individual contribution: Conceptualization — C.D. and I.G.; Methodology — I.G.; Formal Analysis — C.D.; Data Curation — M.C.; Writing — Original Draft — M.C.; Writing — Review & Editing — C.D. and I.G.; Supervision — C.D.; Funding Acquisition — I.G.
Declaration of conflicting interests: The Authors declare that there is no conflict of interest.
JEL Classification: G32, G34, M41, M42, M48
Received: 09.06.2023
Accepted: 24.10.2023
Published online: 26.10.2023
How to cite this paper: D’Este, C., Galavotti, I., & Carabelli, M. (2023). Goodwill reporting in corporate acquisitions: The effects of managerial discretion under the new accounting rules. Corporate Ownership & Control, 20(4), 72–83. https://doi.org/10.22495/cocv20i4art5
