Purchase, pooling, and equity analysts' valuation judgments

• 成果类型: Article
• 署名作者: Hopkins, PE; Houston, RW; Peters, MF
• 署名单位: Indiana University System; Indiana University Bloomington; University of Alabama System; University of Alabama Tuscaloosa; University System of Maryland; University of Maryland College Park
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/accr.2000.75.3.257
• 发表日期: 2000
• 页码: 257-281
• 关键词: information; acquisition

摘要

We provide evidence that analysts' stock-price judgments depend on (1) the method of accounting for a business combination and (2) the number of years that have elapsed since the business combination. Consistent with business-press reports of managers' concerns, analysts' stock-price judgments are lowest when a company applies the purchase method of accounting and ratably amortizes the acquisition premium. The number of years since the business combination affects analysts' price estimates only when the company applies the purchase method and ratably amortizes goodwill-analysts' price estimates are lower when the business-combination transaction is further in the past. However, this joint effect of accounting method and timing is mitigated by the Financial Accounting Standards Board's proposed income-statement format requiring companies to report separate line items for after-tax income before goodwill charges and net-of-tax goodwill charges. When a company uses the purchase method of accounting and writes off the acquisition premium as in-process research and development, analysts' stock-price judgments are not statistically different from their judgments when a company applies pooling-of-interest accounting.