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Goodwill under IFRS: Relevance and disclosures in an unfavorable environment

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  • Baboukardos, Diogenis
  • Rimmel, Gunnar

Abstract

The accounting treatment of purchased goodwill under IFRS has been severely criticized due to the extensive use of fair value accounting. The purpose of this study is to enrich the ongoing debate upon this issue by drawing attention to the market valuation implications of goodwill in a country outside the Anglo-Saxon accounting paradigm, where the application of fair value accounting has been seen as more problematic. The results indicate that, in the case of purchased goodwill, fair value accounting generates relevant accounting numbers but only in companies that comply highly with IFRS disclosure requirements.

Suggested Citation

  • Baboukardos, Diogenis & Rimmel, Gunnar, 2014. "Goodwill under IFRS: Relevance and disclosures in an unfavorable environment," Accounting forum, Elsevier, vol. 38(1), pages 1-17.
    • Handle: RePEc:eee:accfor:v:38:y:2014:i:1:p:1-17
    DOI: 10.1016/j.accfor.2013.11.001
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    3. Nicola Giuseppe Castellano & Katia Corsi & Roberto Del Gobbo, 2015. "Goodwill Disclosure in Europe. Profiles of disclosing companies," Eastern European Business and Economics Journal, Eastern European Business and Economics Studies Centre, vol. 1(2), pages 32-65.
    4. Musa Yelwa Abubakar & Nasiru Abdulsallam & Muhammad Yusuf Alkali, 2017. "The Impact of the New Accounting Reporting Among Listed Firms in Nigerian Stock Market," Asian Journal of Social Sciences and Management Studies, Asian Online Journal Publishing Group, vol. 4(1), pages 1-9.
    5. Gonçalves, Rute & Lopes, Patrícia & Craig, Russell, 2017. "Value relevance of biological assets under IFRS," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 29(C), pages 118-126.
    6. Durocher, Sylvain & Georgiou, Omiros, 2022. "Framing accounting for goodwill: Intractable controversies between users and standard setters," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 89(C).
    7. Rute Gonçalves & Patrícia Lopes, 2015. "Value-Relevance of Biological Assets under IFRS," FEP Working Papers 556, Universidade do Porto, Faculdade de Economia do Porto.
    8. Tsalavoutas, Ioannis & Tsoligkas, Fanis & Evans, Lisa, 2020. "Compliance with IFRS mandatory disclosure requirements: A structured literature review," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 40(C).
    9. Spasić Dejan, 2018. "Do Serbian Companies Provide Relevant Disclosures About Goodwill?," Economic Themes, Sciendo, vol. 56(1), pages 127-138, April.
    10. d'Arcy, Anne & Tarca, Ann, 2018. "Reviewing IFRS Goodwill Accounting Research: Implementation Effects and Cross-Country Differences," The International Journal of Accounting, Elsevier, vol. 53(3), pages 203-226.
    11. Lorenzo Simoni & Stefan Schaper & Christian Nielsen, 2022. "Business Model Disclosures, Market Values, and Earnings Persistence: Evidence From the UK," Abacus, Accounting Foundation, University of Sydney, vol. 58(1), pages 142-173, March.
    12. Jamaliah Abdul Majid, 2019. "Contemporary Issues Surrounding an Impairment-Only Approach to Acquired Goodwill: A Selected Review," International Business Research, Canadian Center of Science and Education, vol. 12(4), pages 90-97, April.
    13. repec:eeb:15v1n2:v:1:y:2015:i:2:p:32-65 is not listed on IDEAS
    14. Julius Gaël Tchatchou Tchaptchet & Olivier Colot, 2019. "Goodwill’s Accounting Practices in Belgium and Compliance with IAS 36 Required Disclosures," International Business Research, Canadian Center of Science and Education, vol. 12(3), pages 139-152, March.
    15. Redhwan Ahmed Ali Al-Dhamari & Sitraselvi Chandren, 2018. "Audit Partners Gender, Auditor Quality and Clients Value Relevance," Global Business Review, International Management Institute, vol. 19(4), pages 952-967, August.

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