James, Kieran and How, Janice and Verhoeven, Peter (2011) On the allocation of a takeover purchase price under AASB1013. Asian Academy of Management Journal of Accounting and Finance, 7 (2). pp. 1-34. ISSN 1823-4992
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The purpose of this paper is to document and explain the allocation of takeover purchase price to identifiable intangible assets (IIAs), purchased goodwill, and/or target net tangible assets in an accounting environment unconstrained with respect to IIA accounting policy choice. Using a sample of Australian acquisitions during the unconstrained accounting environment from 1988 to 2004, we find the percentage allocation of purchase price to 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 capitalise 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. The paper contributes to the accounting policy choice literature by showing how Australian firms make the one-off accounting policy choice in regards allocation of takeover purchase price (which is often a substantial dollar amount to) in an environment where accounting for IIAs was unconstrained.
|Item Type:||Article (Commonwealth Reporting Category C)|
|Additional Information:||Authors retain the following rights:... (iii) make any version of the Contribution available on digital repositories; provided in each case PENERBIT USM (and Publication) is cited as the first/forthcoming publisher of the Contribution and the Author(s) accurately distinguish any modified version of the Contribution from that published or to be published by PENERBIT USM.|
|Uncontrolled Keywords:||purchased goodwill; identifiable intangible assets; accounting policy choice; information signalling; opportunism|
|Depositing User:||Dr Kieran James|
|Date Deposited:||19 Jun 2012 08:05|
|Last Modified:||03 Jul 2013 01:13|
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