The Amount and Timing of Goodwill Write-Offs and Revaluations: Evidence from U.S. and U.K. Firms

This paper investigates criticisms that U.S. GAAP had given firms too much discretion in determining the amount and timing of goodwill write-offs. Using 1,576 U.S. and 563 U.K. acquisitions, we find little evidence that U.S. firms managed the amount of goodwill write-off or that U.K. firms managed t...

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Bibliographic Details
Published in:Review of quantitative finance and accounting 2004-09, Vol.23 (2), p.99-121
Main Authors: Henning, Steven L, Shaw, Wayne H, Stock, Toby
Format: Article
Language:English
Subjects:
Accounting
Accounting methods
Amortization
Assets
Discounted cash flow
Fair market value
Fair value
Finance
Financial incentives
GAAP
Goodwill
Hypotheses
Incentives
Intangible assets
Management
Shareholder approval
Stockholders
Studies
U.S.A
United Kingdom
Valuation
Writeoffs
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Summary:This paper investigates criticisms that U.S. GAAP had given firms too much discretion in determining the amount and timing of goodwill write-offs. Using 1,576 U.S. and 563 U.K. acquisitions, we find little evidence that U.S. firms managed the amount of goodwill write-off or that U.K. firms managed the amount of revaluations (write-ups of intangible assets). However, our results are consistent with U.S. firms delaying goodwill write-offs and U.K. firms timing revaluations strategically to avoid shareholder approval linked to certain financial ratios. [PUBLICATION ABSTRACT]
ISSN:0924-865X
1573-7179
DOI:10.1023/B:REQU.0000039507.82692.d3