Please use this identifier to cite or link to this item: http://hdl.handle.net/10397/65286
PIRA download icon_1.1View/Download Full Text
Title: Accounting discretion and purchase price allocation after acquisitions
Authors: Zhang, IX
Zhang, Y 
Issue Date: 1-Apr-2017
Source: Journal of accounting, auditing and finance, 1 Apr. 2017, v. 32, no. 2, p. 241-270
Abstract: The recent movement in standards setting toward fair-value-based accounting beyond financial assets and liabilities calls for more empirical evidence on fair-value measurement, especially that of intangible assets. This article studies the initial valuation of goodwill and identifiable intangible assets after acquisitions. We find that the allocation of purchase price to goodwill and identifiable intangible assets is related to the economic determinants of the valuation. However, it is also significantly affected by managerial incentives arising from the differential treatments of goodwill and identifiable intangible assets under Statement of Financial Accounting Standards (SFAS) 142. The same managerial discretions are not exhibited in the purchase price allocation prior to SFAS 142, when goodwill and other intangibles are both amortized. These findings suggest that unverifiable fair value measures are associated with the underlying economics but also deviate from the true values in the presence of management reporting incentives. Further analysis suggests that external appraisers constrain managerial discretion in intangible asset valuation to an extent but do not completely eliminate it.
Keywords: Fair-value accounting
Goodwill
Intangible assets
SFAS 142
Publisher: SAGE Publications
Journal: Journal of accounting, auditing and finance 
ISSN: 0148-558X
DOI: 10.1177/0148558X15598693
Rights: © The Author(s) 2015
This is the accepted version of the publication Zhang, I. X., & Zhang, Y., Accounting discretion and purchase price allocation after acquisitions, Journal of Accounting, Auditing & Finance (Volume 32 and Issue Number 2) pp. 241-270. Copyright © 2015 (The Author(s)). DOI: 10.1177/0148558X15598693.
Appears in Collections:Journal/Magazine Article

Files in This Item:
File Description SizeFormat 
Zhang_Accounting_Discretion_Purchase.pdfPre-Published version665.81 kBAdobe PDFView/Open
Open Access Information
Status open access
File Version Final Accepted Manuscript
Access
View full-text via PolyU eLinks SFX Query
Show full item record

Page views

86
Last Week
4
Last month
Citations as of Aug 7, 2022

Downloads

6
Citations as of Aug 7, 2022

SCOPUSTM   
Citations

15
Last Week
1
Last month
Citations as of Aug 4, 2022

WEB OF SCIENCETM
Citations

16
Last Week
0
Last month
Citations as of Aug 4, 2022

Google ScholarTM

Check

Altmetric


Items in DSpace are protected by copyright, with all rights reserved, unless otherwise indicated.