Evidence on the Effects of SFAS 142 on the Reliability of Goodwill Write-Offs

Ahmed, Anwer S.; Guler, Lale

doi:10.2139/ssrn.989056

Cited by 28 publications

(26 citation statements)

References 12 publications

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“…Following prior literature, I identify the firms as those 9 To avoid a confounding effect of goodwill accounting in the income statement and balance sheet, I use net income before goodwill charge. This approach is consistent with prior studies (e.g., Ahmed and Guler, 2007). The goodwill charge of the postperiod is an amount of goodwill impairment (À#368).…”

Section: Sfas 142 and Managerial Discretionsupporting

confidence: 90%

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The effect of SFAS 142 on the ability of goodwill to predict future cash flows

Lee

2011

Journal of Accounting and Public Policy

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Section: Sfas 142 and Managerial Discretionsupporting

confidence: 90%

“…Ahmed and Guler (2007) document the higher association between write-offs or goodwill balance and stock returns in the SFAS 142 period. They view their findings as the enhanced reliability due to the enactment of SFAS 142.…”

Section: Literature Reviewmentioning

confidence: 88%

The effect of SFAS 142 on the ability of goodwill to predict future cash flows

Lee

2011

Journal of Accounting and Public Policy

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“…Those with poor impairment disclosure exhibited high and stable average EBITDA (19 % of turnover) and even higher turnover growth (40 % across the three years). According to prior literature (Ahmed and Guler 2007), the disclosure level appears related not to BM features but to the firm's performance. Because we found no statistically significant relation between this accounting choice and BMs, we confirmed H3: Companies with different BMs show similar disclosure levels.…”

Section: Resultsmentioning

confidence: 94%

Does business model affect accounting choices? An empirical analysis of European listed companies

2015

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Financial accounting research increasingly includes business model (BM) constructs, but the ability of financial reporting to capture BM characteristics has not been verified. This study empirically explores the links between BMs and accounting choices by clustering a sample of 103 European listed companies according to an innovative, nonlinear algorithm (self-organizing map) that uses pertinent industrial, strategic, governance, and financial variables to uncover different dimensions of a BM. The authors investigate accounting choices (accounting measurement, accounting treatment, and disclosure level) by companies that belong to the different identified BMs. The analysis of the relations between different company BMs and their accounting choices indicates no significant connections, which offers empirical confirmation of the criticisms regarding the inability of financial reporting to represent (or even consider) a company's BM. The results suggest further attempt to capture BM in financial reporting, which requires regulators to establish accounting standards that acknowledge the value creation processes of an entity and incentivize managers to represent those processes.

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“…Companies with more CGUs recorded less goodwill impairment. Similarly, Ahmed and Guler (2007) state that more CGUs are connected with lower extent of discretion. In their empirical analysis, based on American publicly quoted companies, they established that goodwill of companies with more CGUs explains a higher extent of stock prices in comparison with goodwill allocated to less CGUs.…”

Section: Factors That Facilitate Discretionmentioning

confidence: 99%