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The value relevance of goodwill impairment

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  • Xu, Wei
  • Anandarajan, Asokan
  • Curatola, Anthony

Abstract

After a 5year deliberation, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standard (SFAS) No. 142, Goodwill and Other Intangible Assets. The main objective of SFAS 142 is to increase transparency. We find that goodwill impairment charges are negatively viewed by investors, on average, but financial health moderates the relation. Returns for profitable firms are negative, but returns for loss firms are positive. The regulatory implications are that the goodwill impairment charge is conveying value relevant information.

Suggested Citation

  • Xu, Wei & Anandarajan, Asokan & Curatola, Anthony, 2011. "The value relevance of goodwill impairment," Research in Accounting Regulation, Elsevier, vol. 23(2), pages 145-148.
    • Handle: RePEc:eee:reacre:v:23:y:2011:i:2:p:145-148
    DOI: 10.1016/j.racreg.2011.06.007
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    Cited by:

    1. Du, Hui & Li, Sherry Fang & Xu, Randall Zhaohui, 2014. "Adjustment of valuation inputs and its effect on value relevance of fair value measurement," Research in Accounting Regulation, Elsevier, vol. 26(1), pages 54-66.
    2. Sun, Li, 2016. "Managerial ability and goodwill impairment," Advances in accounting, Elsevier, vol. 32(C), pages 42-51.
    3. Begoña Giner & Francisca Pardo, 2015. "How Ethical are Managers’ Goodwill Impairment Decisions in Spanish-Listed Firms?," Journal of Business Ethics, Springer, vol. 132(1), pages 21-40, November.
    4. Bagna, Emanuel & Ramusino, Enrico Cotta & Ogliari, Matteo, 2023. "The impact of different goodwill accounting methods on stock prices: A comparison of amortization and impairment-only methodologies," International Review of Financial Analysis, Elsevier, vol. 85(C).
    5. Araceli Amorós Martínez & José Antonio Cavero Rubio, 2018. "The Economic Effects of IFRS Goodwill Reporting," Australian Accounting Review, CPA Australia, vol. 28(3), pages 309-322, September.
    6. Mihaela DUMITRASCU & Radu Daniel LOGHIN, 2016. "A Study on the Relevance of the Goodwill Impairment in Context of Audit Partner`s Rotation," The Audit Financiar journal, Chamber of Financial Auditors of Romania, vol. 14(133), pages 1-88, January.
    7. Veiga, José & Fernandes, Joaquim & Gonçalves, Cristina & Andraz, Georgette, 2015. "The Relevance of Fair Value Across Countries: Firms Listed in Lisbon and Madrid Stock Exchange," Journal of Tourism, Sustainability and Well-being, Cinturs - Research Centre for Tourism, Sustainability and Well-being, University of Algarve, vol. 3(1), pages 78-95.
    8. Wen, He & Moehrle, Stephen R., 2016. "Accounting for goodwill: An academic literature review and analysis to inform the debate," Research in Accounting Regulation, Elsevier, vol. 28(1), pages 11-21.

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