On the allocation of takeover purchase price under AASB1013

VERHOEVEN, Keiran James:PETER (0003) On the allocation of takeover purchase price under AASB1013. Asian Journal of Business and Accounting.

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Abstract

Using a sample of Australian acquisitions during the unconstrained accounting environment from 1988 to 2004, we find the percentage allocation of purchase price to identifiable intangible assets (IIAs) averaged 19.09%. The percentage allocation to IIAs is significantly positively related to return on assets and insignificantly related to leverage, contrary to opportunism. Efficiency suggests an explanation: profitable firms acquire and capitalize a higher percentage of IIAs in acquisitions. The targets investment opportunity set is significantly positively related to the percentage allocation to IIAs, consistent with information-signalling. Additional tests show that the percentage allocation of purchase price to purchased goodwill is significantly negatively related to the acquirers subsequent abnormal returns, consistent with overpayment for purchased goodwill.

Item Type: Article
Uncontrolled Keywords: Purchased goodwill, Identifiable intangible assets, Accounting policy choice, Information signalling, Opportunism
Depositing User: MR. ADNAN YAHYA
Date Deposited: 11 Oct 0003
Last Modified: 11 Oct 0003
URI: http://repository.um.edu.my/id/eprint/111681

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