Investment opportunity set influence on goodwill amortisation
Asia-pacific Journal of Accounting & Economics(2003)
摘要
Abstract Using an institutional setting where GAAP is relatively unconstrained, we examine whether managers use their goodwill accounting discretion to reflect firms\u0027 growth options that are not otherwise captured in reported identifiable assets. We employ a continuous dependent variable to find that accounting discretion is exercised through estimates of goodwill\u0027s economic life (amortisation period) in a manner that reflects the firms\u0027 underlying growth options. These results are consistent with managers using accounting techniques to reflect firms\u0027 investment opportunity sets (IOS). We find that the goodwill accounting decision has a stronger association with IOS variables than with traditionally applied contracting variables. Also, the IOS variables make a greater marginal contribution to the explanatory power of models of goodwill amortisation periods than do traditional contracting or opportunism variables. © City University of Hong Kong.
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