Non-GAAP Earnings and Definite-Lived Intangible Asset Allocations in Mergers and Acquisitions

• 成果类型: Article
• 署名作者: Ashby, Jason A.; Chyz, James A.; Myers, Linda A.; Whipple, Benjamin C.
• 署名单位: University of Louisiana System; University of Louisiana Monroe; University of Tennessee System; University of Tennessee Knoxville; University System of Georgia; University of Georgia
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/TAR-2020-0554
• 发表日期: 2024
• 页码: 31-56
• 关键词: information-content; disclosure; Managers

摘要

We test whether firms that exclude the effects of amortization from non-GAAP earnings allocate more of an acquisition's purchase price to definite -lived intangible assets (DLIA). This strategy can yield two potential benefits: it can (1) increase non-GAAP earnings by shifting depreciation of tangible assets, which is often included in non-GAAP earnings, to amortization of DLIA, which non-GAAP earnings exclude, and (2) decrease the likelihood of future impairments by shifting allocations from goodwill to DLIA. Consistent with expectations, we find that nonGAAP-reporting firms that exclude amortization from non-GAAP earnings allocate more of the purchase price to DLIA. We also find that these firms allocate less of the purchase price to depreciable assets and goodwill. Finally, we document earnings surprise and valuation benefits related to these allocation choices. Overall, our results provide new evidence about non-GAAP reporting and purchase price allocations and suggest that non-GAAP reporting can influence management's GAAP accounting choices.