IDEAS home Printed from https://ideas.repec.org/a/taf/euract/v18y2009i1p123-140.html
   My bibliography  Save this article

The Value-Relevance of Financial Statement Recognition versus Note Disclosure: Evidence from Goodwill Accounting

Author

Listed:
  • Khaled Al Jifri
  • David Citron

Abstract

The relative significance of financial statement recognition and note disclosure is an important issue for accounting regulators, preparers and auditors. While standard-setters prioritise financial recognition over disclosure, the empirical evidence on the value-relevance of note disclosures is mixed. This is partly due to the severe methodological problems inherent in comparing the two modes of presentation. This paper examines this issue in a new context by exploiting the UK regulatory environment where old pre-FRS 10 goodwill continues to be disclosed in the notes to the accounts at the same time as new post-FRS 10 goodwill is capitalised. It thus uses a within-firm research method to examine the relative significance of the two goodwill amounts. The analysis is based on a sample of 243 non-financial firms containing amounts of both recognised and disclosed goodwill in their 2002 financial statements. Both variables are significantly associated with share price. In addition, for firms engaging in R&D, there is no significant difference between the contributions of disclosed and recognised goodwill in explaining market value, a result consistent with the markets efficiently incorporating goodwill information irrespective of where it appears in the annual report.

Suggested Citation

  • Khaled Al Jifri & David Citron, 2009. "The Value-Relevance of Financial Statement Recognition versus Note Disclosure: Evidence from Goodwill Accounting," European Accounting Review, Taylor & Francis Journals, vol. 18(1), pages 123-140.
  • Handle: RePEc:taf:euract:v:18:y:2009:i:1:p:123-140
    DOI: 10.1080/09638180802324351
    as

    Download full text from publisher

    File URL: http://www.tandfonline.com/doi/abs/10.1080/09638180802324351
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. repec:eee:advacc:v:29:y:2013:i:2:p:312-331 is not listed on IDEAS
    2. Carmen- Alexandra BALTARIU, 2015. "The Current State Of Knowledge In The Value Relevance Research Field," SEA - Practical Application of Science, Fundația Română pentru Inteligența Afacerii, Editorial Department, issue 7, pages 13-20, April.
    3. repec:eee:accfor:v:38:y:2014:i:1:p:1-17 is not listed on IDEAS
    4. repec:eee:jiaata:v:29:y:2017:i:c:p:118-126 is not listed on IDEAS
    5. Baschieri, Giulia & Carosi, Andrea & Mengoli, Stefano, 2016. "Does the earnings quality matter? Evidence from a quasi-experimental setting," Finance Research Letters, Elsevier, vol. 19(C), pages 146-157.
    6. Isabel Lourenço & Jeffrey Callen & Manuel Branco & José Curto, 2014. "The Value Relevance of Reputation for Sustainability Leadership," Journal of Business Ethics, Springer, vol. 119(1), pages 17-28, January.
    7. repec:bla:abacus:v:53:y:2017:i:1:p:28-58 is not listed on IDEAS
    8. Rute Gonçalves & Patrícia Lopes, 2015. "Value-Relevance of Biological Assets under IFRS," FEP Working Papers 556, Universidade do Porto, Faculdade de Economia do Porto.
    9. Francesco Avallone & Claudia Gabbioneta & Paola Ramassa & Marco Sorrentino, 2015. "Why Do Firms Write Off Their Goodwill? A Comparison of Different Accounting Systems," FINANCIAL REPORTING, FrancoAngeli Editore, vol. 2015(1), pages 23-40.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:euract:v:18:y:2009:i:1:p:123-140. 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: (Chris Longhurst). General contact details of provider: http://www.tandfonline.com/REAR20 .

    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.

    We have no references for this item. You can help adding them by using 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.