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Assessing the Value of Growth Option Synergies from Business Combinations and Testing for Goodwill Impairment: A Real Options Perspective

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  • Francesco Baldi
  • Lenos Trigeorgis
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    Abstract

    Goodwill is an intangible asset, and therefore hard to measure and difficult to account for. This article argues that the two-stage impairment test for acquired goodwill under SFAS 142 has several limitations. Most important, it measures aggregate rather than acquired goodwill, making it very difficult to separate acquisition-related goodwill from aggregate enterprise goodwill after a business combination. As a consequence, any potential deterioration of acquired goodwill value could be concealed by increases in internally generated goodwill. Copyright Copyright (c) 2009 Morgan Stanley.

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    File URL: http://www.blackwell-synergy.com/doi/abs/10.1111/j.1745-6622.2009.00255.x
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    Bibliographic Info

    Article provided by Morgan Stanley in its journal Journal of Applied Corporate Finance.

    Volume (Year): 21 (2009)
    Issue (Month): 4 ()
    Pages: 115-124

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    Handle: RePEc:bla:jacrfn:v:21:y:2009:i:4:p:115-124

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