Non-additivity in accounting valuation: Internally generated goodwill as an aggregation of interacting assets

Jean-Francois Casta (), Luc Paugam () and Hervé Stolowy ()
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Luc Paugam: DRM - Dauphine Recherches en Management - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres - CNRS - Centre National de la Recherche Scientifique

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Abstract: In this paper we propose a new method to explain the creation and measure the value of internally generated goodwill (IGG). Our method is based on the idea that firm value is affected by interactions between assets used in combination to conduct business. This novel approach contrasts with the traditional additive approaches to valuing IGG, which assume assets are independent. We use Choquet capacities, i.e., non-additive aggregation operators, to explain the creation of IGG, and demonstrate from a sample of U.S. high technology sector firms that this model performs better than the traditional additive Ohlson model on accuracy in forecast enterprise value.

Keywords: Internally generated goodwill; Going concern goodwill; Synergy; Choquet integral; Residual income model (search for similar items in EconPapers)
Date: 2011-04-20
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00541525v3
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Citations: View citations in EconPapers (1)

Published in European Accounting Association (EAA) 2011 annual meteing, Apr 2011, Rome-Siena, Italy. Financial reporting session

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