The Effect of Sales Terms on Goodwill, Risk and Return in Transfers of Closely Held Accounting Practices
Most sale proceeds from accounting practice transfers are allocable to goodwill despite the fact that neither sellers nor buyers generate significant profit from ordinary operations. Widely held valuation models hold that goodwill value is driven exclusively by profit and that accounting practice investors ought to demand returns higher than those realized by publicly traded equity investors. The existence of transferable goodwill without operating profit thus seems anomalous. This paper demonstrates that risk reducing sales terms explain these anomalies. As these sales terms are not necessarily unique to accounting practice transfers, the implications for valuation theory are quite significant.
Volume (Year): 3 (2008)
Issue (Month): 1 (September)
|Contact details of provider:|| Web page: https://www.degruyter.com|
|Order Information:||Web: https://www.degruyter.com/view/j/jbvela|
When requesting a correction, please mention this item's handle: RePEc:bpj:jbvela:v:3:y:2008:i:1:n:6. 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: (Peter Golla)
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.