CEO Compensation and Fair Value Accounting: Evidence from Purchase Price Allocation

• 成果类型: Article
• 署名作者: Shalev, Ron; Zhang, Ivy Xiying; Zhang, Yong
• 署名单位: New York University; University of Minnesota System; University of Minnesota Twin Cities; Hong Kong Polytechnic University
• 刊物名称: JOURNAL OF ACCOUNTING RESEARCH
• ISSN/ISSBN: 0021-8456
• DOI: 10.1111/1475-679X.12015
• 发表日期: 2013
• 页码: 819-854
• 关键词: EMPIRICAL-ANALYSIS; restructuring charges; equity incentives; VALUE-RELEVANCE; performance; FIRMS; INFORMATION; acquisition; DISCRETION; valuation

摘要

This study investigates the impact of CEO compensation structure on post-acquisition purchase price allocation, an accounting procedure that involves fair value estimation of various assets and liabilities. We find that CEOs whose compensation packages rely more on earnings-based bonuses are more likely to overallocate the purchase price to goodwill, the largest asset recorded post-acquisition. Because goodwill is not amortized, the overallocation likely increases post-acquisition earnings and bonuses. We also find that, when the acquirer's CEO bonus plan includes performance measures that are not affected, or are less affected, by the overstatement of goodwill, such as cash flows, sales, or earnings growth, the overallocation to goodwill motivated by bonus plans diminishes.