Changes in the value relevance of goodwill accounting following the adoption of IFRS 3
Mattias Hamberg and
Journal of International Accounting, Auditing and Taxation, 2014, vol. 23, issue 2, 59-73
This study examines the value relevance effects of changes in goodwill accounting in a European setting. International Financial Reporting Standard (IFRS) 3 replaced accounting rules that emphasized goodwill amortization over short useful lives which kept goodwill balances low. Goodwill accounting under IFRS 3 largely relies on manager fair value estimates of acquired business units. Using Swedish data, we show that goodwill amortizations were not value-relevant prior to the adoption of IFRS 3. However, impairments reported in addition to amortization were significantly related to stock returns during that period. In contrast, under the impairment-only regime prescribed by IFRS 3, impairments are no longer statistically related to stock returns.
Keywords: Financial reporting; Goodwill accounting; Value relevance; IFRS 3; SFAS 142 (search for similar items in EconPapers)
JEL-codes: M41 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6) Track citations by RSS feed
Downloads: (external link)
Full text for ScienceDirect subscribers only
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:eee:jiaata:v:23:y:2014:i:2:p:59-73
Access Statistics for this article
Journal of International Accounting, Auditing and Taxation is currently edited by R. Larson
More articles in Journal of International Accounting, Auditing and Taxation from Elsevier
Bibliographic data for series maintained by Haili He ().