Please use this identifier to cite or link to this item: http://hdl.handle.net/10397/18942
Title: CEO Compensation and Fair Value Accounting : evidence from Purchase Price Allocation
Authors: Shalev, R
Zhang, IX
Zhang, Y 
Issue Date: 2013
Publisher: Wiley-Blackwell
Source: Journal of accounting research, 2013, v. 51, no. 4, p. 819-854 How to cite?
Journal: Journal of Accounting Research 
Abstract: This study investigates the impact of CEO compensation structure on postacquisition purchase price allocation, an accounting procedure that involves fair value estimation of various assets and liabilities. We find that CEOs whose compensation packages rely more on earnings-based bonuses are more likely to overallocate the purchase price to goodwill, the largest asset recorded postacquisition. Because goodwill is not amortized, the overallocation likely increases post-acquisition earnings and bonuses. We also find that, when the acquirer's CEO bonus plan includes performance measures that are not affected, or are less affected, by the overstatement of goodwill, such as cash flows, sales, or earnings growth, the overallocation to goodwill motivated by bonus plans diminishes.
URI: http://hdl.handle.net/10397/18942
ISSN: 0021-8456
DOI: 10.1111/1475-679X.12015
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