Goodwill impairment versus goodwill amortization : which regime reflects better the underlying economic attributes of goodwill?
KeywordsΥπεραξία ; Διεθνή λογιστικά πρότυπα ; Αποσβέσεις ; Απομείωση ; Goodwill ; Amortization ; Impairment ; IFRS
Accounting for goodwill has been a controversial issue amongst researchers and academics, as well as for accounting standards setting professional bodies, given the difficulties concerning its definition, measurement and subsequent evaluation. This debate mainly lies on the contradictory views as regards to which accounting regime (amortization vs impairment) better reflects goodwill underlying economic characteristics and value. The aim of this thesis was to investigate the usefulness of goodwill subsequent accounting treatment methods used in order to receive information about the market value of companies taking into account that according to IFRS goodwill accounting treatment changed in 2005 and treatment of goodwill is provided by impairment tests replacing the amortization regime. In order to do so, a panel data methodology was applied for a total sample of 264 German companies for a period extending from 2000 to 2010. According to research findings, the results showed that the impairment regime is more value relevant than the amortization one, indicating that although investors take into account the accounting information provided by goodwill, they do not find amortization regime value relevant. Although, impairment regime reflects more in their valuation of stock prices and therefore also for their decision making process.