Advanced Search
MyIDEAS: Login

On the Allocation of a Takeover Purchase Price under AASB1013

Contents:

Author Info

  • Kieran James

    ()
    (School of Accounting, Economics and Finance, Faculty of Business and Law, University of Southern Queensland, West Street Toowomba, QLD 4350, Australia)

  • Janice How

    (Economics and Finance, Queensland University of Technology Business School, GPO Box 2434, Brisbane, QLD 4001, Australia)

  • Peter Verhoeven

    (Economics and Finance, Queensland University of Technology Business School, GPO Box 2434, Brisbane, QLD 4001, Australia)

Registered author(s):

    Abstract

    The purpose of this paper is to document and explain the allocation of takeover purchase price to identifiable intangible assets (IIAs), purchased goodwill, and/or target net tangible assets in an accounting environment unconstrained with respect to IIA accounting policy choice. Using a sample of Australian acquisitions during the unconstrained accounting environment from 1988 to 2004, we find the percentage allocation of purchase price to IIAs averaged 19.09%. The percentage allocation to IIAs is significantly positively related to return on assets and insignificantly related to leverage, contrary to opportunism. Efficiency suggests an explanation: profitable firms acquire and capitalise a higher percentage of IIAs in acquisitions. The target's investment opportunity set is significantly positively related to the percentage allocation to IIAs, consistent with information-signaling. The paper contributes to the accounting policy choice literature by showing how Australian firms make the one-off accounting policy choice in regards allocation of takeover purchase price (which is often a substantial dollar amount to) in an environment where accounting for IIAs was unconstrained.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://web.usm.my/journal/aamjaf/vol7-2-2011/7-2-1.pdf
    Download Restriction: no

    Bibliographic Info

    Article provided by Penerbit Universiti Sains Malaysia in its journal Asian Academy of Management Journal of Accounting and Finance.

    Volume (Year): 7 (2011)
    Issue (Month): 2 ()
    Pages: 1-34

    as in new window
    Handle: RePEc:usm:journl:aamjaf00702_1-34

    Contact details of provider:
    Web page: http://web.usm.my/aamj/
    More information through EDIRC

    Related research

    Keywords: purchased goodwill; identifiable intangible assets; accounting policy choice; information signaling; opportunism;

    References

    No references listed on IDEAS
    You can help add them by filling out this form.

    Citations

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:usm:journl:aamjaf00702_1-34. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Journal Division).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.