Towards an understanding of the phases of goodwill accounting in four Western capitalist countries: From stakeholder model to shareholder model

Hervé Stolowy (), Yuan Ding () and Jacques Richard ()
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Yuan Ding: CEIBS - Europe International Business School
Jacques Richard: 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: The objective of this paper is to illustrate that the change in shareholders' attitude towards firms (from stakeholder model to shareholder model) influences the accounting treatments of goodwill. Our study is based on four countries (Great Britain, the United States, Germany, and France) and covers more than a century, starting in 1880. We explain that all these countries have gone through four identified phases of goodwill accounting, classified as (1) "static" (immediate or rapid expensing), (2) "weakened static" (write-off against equity), (3) "dynamic" (recognition with amortization over a long period) and (4) "actuarial" (recognition without amortization but with impairment if necessary). We contribute several new features to the existing literature on goodwill: our study (1) is international and comparative, (2) spans more than a century, (3) uses the stakeholder/shareholder models to explain the evolution in goodwill treatment in the four countries studied. More precisely, it relates a balance sheet theory, which distinguishes four phases in accounting treatment for goodwill, to the shift from a stakeholder model to a shareholder model, which leads to the preference for short-term rather than long-term profit, (4) contributes to the debate on whether accounting rules simply reflect or arguably help to produce the general trend towards the shareholder model, (5) demonstrates a "one-way" evolution of goodwill treatment in the four countries studied, towards the actuarial phase.

Keywords: Great Britain; United States; Goodwill; Accounting history; Social nature of accounting; Stakeholder/shareholder models; Corporate governance; France; Germany; Histoire comptable; Nature sociale de la comptabilité; Modèles des " Stakeholders "/actionnaires; Gouvernance; Allemagne; Etats-Unis; Grande Bretagne (search for similar items in EconPapers)
Date: 2007-06-20
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Published in 2007

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Related works:
Journal Article: Towards an understanding of the phases of goodwill accounting in four Western capitalist countries: From stakeholder model to shareholder model (2008)
Working Paper: Towards an Understanding of the Phases of Goodwill Accounting in Four Western Capitalist Countries: From Stakeholder Model to Shareholder Model (2008)
Working Paper: Towards an understanding of the phases of goodwill accounting in four Western capitalist countries: From stakeholder model to shareholder model (2007)
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