The Investment Opportunity Set and Acquired Goodwill

• 成果类型: Article
• 署名作者: Wong, Jilnaught; Wong, Norman
• 署名单位: University of Auckland
• 刊物名称: CONTEMPORARY ACCOUNTING RESEARCH
• ISSN/ISSBN: 0823-9150
• DOI: 10.1506/AFAE-HLRE-3KRY-CPNA
• 发表日期: 2001
• 页码: 173-196
• 关键词: corporate; determinants; association; INFORMATION; efficient; dividend; BEHAVIOR; CHOICE; firm

摘要

This paper examines how managers in New Zealand allocate the cost of firms' investments in subsidiaries between net tangible assets and acquired goodwill. We find a negative relation between acquired goodwill and leverage. This could be interpreted as the result of managers of highly leveraged acquiring firms opportunistically allocating a lower portion of the acquisition price to acquired goodwill. However, this analysis, like much of the research on accounting choice, suffers from an omitted variables problem. We present evidence that the observed negative relation between acquired goodwill and leverage may stem from each variable's relation to the investment opportunity set. Further, we find no evidence that acquired goodwill is related to the existence of debt covenants. Together, these results suggest an endogenous relation between the firm's asset structure, its financing policy, and the allocation of acquisition price to acquired goodwill.