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Merger Premia and National Differences in Accounting for Goodwill
Author(s) -
Choi Frederick D. S.,
Lee Changwoo
Publication year - 1991
Publication title -
journal of international financial management and accounting
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.818
H-Index - 37
eISSN - 1467-646X
pISSN - 0954-1314
DOI - 10.1111/j.1467-646x.1991.tb00096.x
Subject(s) - goodwill , earnings , accounting , business , mergers and acquisitions , monetary economics , economics , finance
We examine the effects of international accounting diversity on the market for corporate control with particular reference to whether national differences in the treatment of purchased goodwill are associated with differences in premia offered by U.K. as opposed to U.S. acquirers of U.S. targets. We find merger premia associated with U.K. acquisitions to be consistently higher than those for U.S. acquisitions. Moreover, higher premiums offered by U.K. acquirors appear to be associated with not having to amortize goodwill to earnings. The evidence provided here suggests that national differences in accounting impact differentially on managerial behavior.