Amortisation Versus Impairment of Goodwill and Accounting Quality

Paul Van Hulzen, Laura Alfonso, Georgios Georgakopoulos () and Ioannis Sotiropoulos
Additional contact information
Paul Van Hulzen: Amsterdam Business School, University of Amsterdam, Plantage Muidergracht 12, Amsterdam 1018TV, The Netherlands
Laura Alfonso: Amsterdam Business School, University of Amsterdam, Plantage Muidergracht 12, Amsterdam 1018TV, The Netherlands
Georgios Georgakopoulos: Amsterdam Business School, University of Amsterdam, Plantage Muidergracht 12, Amsterdam 1018TV, The Netherlands
Ioannis Sotiropoulos: Department of Finance and Auditing, TEI of Epirus, Psathaki, Preveza, PC 48100, Greece

International Journal of Business and Economic Sciences Applied Research (IJBESAR), 2011, vol. 4, issue 3, 93-118

Abstract: In this paper there has been made a comparison between the amortisation and the impairment methods for accounting for goodwill, with regards to their associated effects on accounting quality. Based on two qualitative characteristics of accounting information, as formulated by the International Accounting Standards Board (IASB), the effects of the new impairment method are examined using a value relevance and a timeliness model. The sample consists of European companies that adopted this new method of goodwill accounting, following the required adoption of the International Financial Reporting Standards (IFRS) in 2005. The results indicate that impairment of goodwill is actually less value relevant than amortisation, but that it does lead to more timely accounting information. It is concluded that the objective of the IASB in issuing a new accounting standard is not completely met and it only partially contributes to higher accounting quality.

Keywords: Amortisation; impairment; goodwill; value relevance; timeliness (search for similar items in EconPapers)
JEL-codes: M21 M41 M48 (search for similar items in EconPapers)
Date: 2011
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
https://ijbesar.af.duth.gr/docs/volume4_issue3/amortisation.pdf (application/pdf)
https://ijbesar.af.duth.gr/volume4_issue3.php (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:tei:journl:v:4:y:2011:i:3:p:93-118

Access Statistics for this article

International Journal of Business and Economic Sciences Applied Research (IJBESAR) is currently edited by Christos Grose and Persefoni Polychronidou

More articles in International Journal of Business and Economic Sciences Applied Research (IJBESAR) from Democritus University of Thrace (DUTH), Kavala Campus, Greece Contact information at EDIRC.
Bibliographic data for series maintained by Kostas Stergidis ().