Annals of Social Sciences & Management Studies-Juniper Publishers Abstract To address the question as to whether accounting for goodwill in International Financial Reporting Standards is appropriate, we investigate whether the acquired goodwill of a company is generating future residual earnings. In this paper, we investigate whether the acquired goodwill is generating future results in two components: net and additional income (i.e. other comprehensive income). To do this, we decompose the goodwill as Johnson & Petrone [1]. and formalize, based on the residual income valuation model [2], a link between acquired goodwill, comprehensive residual income generated by these acquisitions and the premium paid. Results based on regressions conducted on French companies constituting the SBF 120 show a significant association between acquired goodwill and subsequent residual income of acquiring firms, and on the two components of income (net income and other comprehe...
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