Change search
CiteExportLink to record
Permanent link

Direct link
Cite
Citation style
  • apa
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf
Indicators of goodwill impairments: Pre- and post-acquisition indicators ability to predict future impairments
Uppsala University, Disciplinary Domain of Humanities and Social Sciences, Faculty of Social Sciences, Department of Business Studies.
Uppsala University, Disciplinary Domain of Humanities and Social Sciences, Faculty of Social Sciences, Department of Business Studies.
2014 (English)Independent thesis Advanced level (degree of Master (Two Years)), 20 credits / 30 HE creditsStudent thesis
Abstract [en]

Companies allocate the majority of the acquisition price to goodwill, which has resulted in

goodwill to become a prominent asset on companies balance sheets. Research shows that

goodwill impairments lag behind the economic reality between two to four years and that the

current accounting regime does not provide adequate disclosures to predict future impairments.

The purpose of this paper is to examine what factors that can predict the occurrence of future

goodwill impairments. We carry out our investigation by choosing several pre-acquisition and

post-performance indicators, which we hand-collect from companies’ annual reports. Our sample

includes acquisitions made by Swedish listed companies during the period 2005 to 2011. To

examine the predictability of goodwill impairments we carry out a series of binary logistic

regressions in which goodwill write-offs are predicted by our acquisition and performance

indicators. Our results suggest that information on acquisition activity, change in segment-level

return on assets and firm-level return on assets are useful to predict goodwill impairments.

Although our findings indicate that information surrounding the acquisition and subsequent

performance can be helpful in predicting future impairments there is still difficulties for external

stakeholders to predict goodwill write-offs. This is due the fact that a majority of acquisitions

lack adequate information on the acquired goodwill. Consequently, our findings have

implications for the accounting literature and standard setters since it is questionable whether

financial statements and their disclosures provide sufficient and relevant information to evaluate

the economic reality of goodwill balances.

Place, publisher, year, edition, pages
2014. , 36 p.
Keyword [en]
Goodwill, Impairments, Acquisitions, Prediction Model, IFRS 3, Segment Performance
National Category
Business Administration
Identifiers
URN: urn:nbn:se:uu:diva-230212OAI: oai:DiVA.org:uu-230212DiVA: diva2:739253
Educational program
Master Programme in Accounting, Auditing and Analysis
Supervisors
Available from: 2014-08-21 Created: 2014-08-20 Last updated: 2014-08-21Bibliographically approved

Open Access in DiVA

fulltext(945 kB)1000 downloads
File information
File name FULLTEXT01.pdfFile size 945 kBChecksum SHA-512
97f32fbc62553b84a7cfe190d9ed47af17dc0c69bf9c07d92137190cf1338045a92ef53d3731136742329f38b46aaa785cb9e8b1ab3b01a1138cba3d66c930c6
Type fulltextMimetype application/pdf

By organisation
Department of Business Studies
Business Administration

Search outside of DiVA

GoogleGoogle Scholar
Total: 1000 downloads
The number of downloads is the sum of all downloads of full texts. It may include eg previous versions that are now no longer available

urn-nbn

Altmetric score

urn-nbn
Total: 654 hits
CiteExportLink to record
Permanent link

Direct link
Cite
Citation style
  • apa
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf