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Goodwill in the Process of Mergers and Acquisitions in Poland

Author

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  • Luty Piotr

    (Wrocław University of Economics, Wrocław, Poland)

Abstract

The aim of this paper was to verify if the goodwill (positive or negative) disclosed after a merger or acquisition is sensitive to manipulating the financial result in the acquiring company. Manipulating the result referred to the extent of cost allocation in short-term prepayments. Later we examined if the operational result achieved by the acquiring company (profit or loss) has an impact upon the revealed goodwill. The verification of the research hypotheses was performed with the use of statistical tools (linear regression analysis, nonlinear regression function test, normality of residual distribution test). As a result of the research, no significant relation between allocating costs and the disclosed negative goodwill was found, only in the case of positive goodwill its value was related to the allocating in assets costs. Neither positive nor negative goodwill was related to the operating results of the acquiring companies in one year preceding the merger or acquisition.

Suggested Citation

  • Luty Piotr, 2018. "Goodwill in the Process of Mergers and Acquisitions in Poland," Financial Sciences. Nauki o Finansach, Sciendo, vol. 23(2), pages 20-29, June.
    • Handle: RePEc:vrs:finsci:v:23:y:2018:i:2:p:20-29:n:2
    DOI: 10.15611/fins.2018.2.02
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    References listed on IDEAS

    as
    1. Louis, Henock, 2004. "Earnings management and the market performance of acquiring firms," Journal of Financial Economics, Elsevier, vol. 74(1), pages 121-148, October.
    2. Erickson, Merle & Wang, Shiing-wu, 1999. "Earnings management by acquiring firms in stock for stock mergers," Journal of Accounting and Economics, Elsevier, vol. 27(2), pages 149-176, April.
    3. Henning, SL & Lewis, BL & Shaw, WH, 2000. "Valuation of the components of purchased goodwill," Journal of Accounting Research, Wiley Blackwell, vol. 38(2), pages 375-386.
    4. Antonia Botsari & Geoff Meeks, 2008. "Do Acquirers Manage Earnings Prior to a Share for Share Bid?," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 35(5‐6), pages 633-670, June.
    5. Antonia Botsari & Geoff Meeks, 2008. "Do Acquirers Manage Earnings Prior to a Share for Share Bid?," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 35(5-6), pages 633-670.
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    More about this item

    Keywords

    merger; acquisition; goodwill;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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