Possibility of Company Goodwill Valuation: Verification in Slovak and Czech Republic

Abstract

The paper deals with the possibilities of company goodwill valuation and verification. The value of company goodwill is still an actual issue for the scientific community. Goodwill as an economic phenomenon has attracted the attention of economic experts since the nineteenth century. Nowadays, there are many approaches to goodwill valuation. However, its identification and quantification are still a challenge. The paper aim is to identify significant sources of company goodwill creation and their verification on the sample of 2 European countries with the similar business environment, political stability and regulatory platform -Slovak and Czech companies. The sample for the identification of significant sources of company goodwill creation consists of the financial statements of Slovak companies in 2015. The sample for data verification consists of the financial statements of Slovak and Czech companies in 2016. The paper identifies the determinants of goodwill creation by multiple regression analysis. The paper also verifies the total explanatory power of these determinants by matrixes of changes. Volatility and deviation of the results are captured by descriptive statistical methods. The paper's results point to a necessity to identify the key determinants of goodwill creation. They bring the construction of an econometric model for company goodwill valuation. It could be used to compute the value of company goodwill of the individual companies in the Slovak economic conditions.

The Implication of Fiscal Principles and Rules on Promoting Sustainable Public Finances in the EU Countries

“…The regression approach follows the literature insights [68][69][70] and solves the econometric problems that arise when evaluating the regression analysis. First, the results of unit root tests are reported in Appendix A, and exemplify that in most cases, the null hypothesis can be rejected, supporting the stationarity of the fiscal variables.…”

Explanatory Power of Earnings Management Models

“…Many authors state that there is currently a wide range of alternative models for measuring earnings management, but the most popular are the Jones model (1991), the modified Jones model (proposed by Dechow, Sloan and Sweeney, 1995), the Theoh, Welch and Wong model (1998), Kasznik's model (1999) and Kothari's model (2005). [17][18][19] Contribution deals with the explanatory power of these most used earnings management models under the condition of Slovak economy.…”

Entities Assessment Methods Based on the Notion of Goodwill

“…Identificarea lor poate duce la crearea și gestionarea eficientă a aces tuia și, în cele din urmă, poate fi un instru ment puternic în efortul competitiv. (Podhorska et al, 2019) În lucrarea Methodical and Practical Approaches to Goodwill Valuation, abordând goodwillul în contextul Rusiei, autorii menționează faptul că odată cu dezvoltarea și stabilizarea relațiilor de piață în Rusia și apariția pie ței financiare ca un segment cu drepturi depline al economiei, companiile ce vizează o existență pe termen lung și prosperă încearcă să treacă la un nou nivel de dezvoltare, în care goodwillul companiei devine cel mai scump activ. Această abordare, bazată pe managementul valorii entităților, este relevantă în primul rând pentru cele care urmăresc să intre pe piața internațională.…”