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Towards an Understanding of the Phases of Goodwill Accounting in Four Western Capitalist Countries: From Stakeholder Model to Shareholder Model

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  • Yuan Ding

    ()
    (GREGH - Groupement de Recherche et d'Etudes en Gestion à HEC - GROUPE HEC - CNRS : UMR2959)

  • Jacques Richard

    ()
    (DRM - Dauphine Recherches en Management - CNRS : UMR7088 - Université Paris Dauphine - Paris IX)

  • Hervé Stolowy

    ()
    (GREGH - Groupement de Recherche et d'Etudes en Gestion à HEC - GROUPE HEC - CNRS : UMR2959)

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.

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Bibliographic Info

Paper provided by HAL in its series Post-Print with number halshs-00366038.

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Date of creation: 01 Jan 2008
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Publication status: Published, Accounting, Organizations & Society, 2008, Vol. 33, Issue 7-8, pp 718-755
Handle: RePEc:hal:journl:halshs-00366038

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Keywords: Goodwill; Accounting history; Social nature of accounting; Stakeholder/shareholder models; Corporate governance; France; Germany; Great Britain; Japan; United States;

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Citations

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Cited by:
  1. Yuan Ding & Thomas Jeanjean & Hervé Stolowy, 2013. "Accounting for Stakeholders or Shareholders? The Case of R&D Reporting," Post-Print hal-01002936, HAL.
  2. Mathieu Floquet, 2010. "Informations Aux Actionnaires Et Informations Aux Salariés : Une Analyse Textuelle Du Rapport Annuel Et Du Rapport De L'Expert-Comptable Du Comité D'Entreprise," Post-Print hal-00481504, HAL.
  3. Jerman, Lambert, 2014. "Information financière, juste valeur et contrôle interne : La corporate governance comme illusion rationnelle ?," Economics Papers from University Paris Dauphine 123456789/13577, Paris Dauphine University.
  4. Pierre Labardin & Karine Fabre, 2011. "Entre coût historique et valeur de marché : Une histoire de la valeur comptable en France (XIXe - début XXe siècle)," Post-Print hal-00650538, HAL.
  5. Terhi Chakhovich, 2010. "The role of outcome focus within subject positions tied to shareholder value," Qualitative Research in Accounting & Management, Emerald Group Publishing, vol. 7(4), pages 450-475, November.
  6. Lambert Jerman, 2013. "La Juste Valeur : Une Comptabilite Actuarielle Pour Les Marches ... Ou Les Comptables ?," Post-Print hal-00991877, HAL.
  7. Chabrak, Nihel & Bouden, Inès, 2010. "The IASB and the shareholder value priestly cult!," Economics Papers from University Paris Dauphine 123456789/6742, Paris Dauphine University.
  8. David Collison & Colin Dey & Gwen Hannah & Lorna Stevenson, 2010. "Anglo-American capitalism: the role and potential role of social accounting," Accounting, Auditing & Accountability Journal, Emerald Group Publishing, vol. 23(8), pages 956-981, October.
  9. Nobes, Christopher & Stadler, Christian, 2013. "How arbitrary are international accounting classifications? Lessons from centuries of classifying in many disciplines, and experiments with IFRS data," Accounting, Organizations and Society, Elsevier, vol. 38(8), pages 573-595.
  10. Clare Roberts & Yue Wang, 2009. "Accounting harmonization and the value-relevance of dirty surplus accounting flows," Review of Accounting and Finance, Emerald Group Publishing, vol. 8(4), pages 340-368, November.
  11. Paugam, Luc, 2011. "Valorisation et reporting du goodwill : enjeux théoriques et empiriques," Economics Thesis from University Paris Dauphine, Paris Dauphine University, number 123456789/8007 edited by Casta, Jean-François, September.

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