Reflections on M&A accounting from AOL’s acquisition of Time Warner

Paul M. Healy

Accounting and Business Research, 2016, vol. 46, issue 5, 528-541

Abstract: In early 2000, AOL announced the acquisition of Time Warner for $162 billion. The acquisition, one of the largest in history, generated $127 billion of goodwill. Yet after only a few years, the merged firm had taken an impairment charge for $99 billion, and the acquisition was viewed as a colossal failure. This study examines how the deal was initially reported and valued, the timeliness of the goodwill impairments, and how the market interpreted the reporting. Given this field evidence, I revisit key questions on M&A reporting standards and implications for future research.

Date: 2016
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DOI: 10.1080/00014788.2016.1182709

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