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Goodwill and Performance

Author

Listed:
  • Kaiss Sarra
  • Nezha Baghar
  • Mounime El Kabbouri

Abstract

In a context of external growth in constant emergence and in the midst of globalization, mergers and acquisitions are multiplying. As a result, goodwill has taken considerable weight in the groups' balance sheets. As a matter of fact, the concept of goodwill has been for over a decade a subject of debates and discussions trying to define the concept and discuss its treatment in accounting and finance. Beginning with an overview to shed light on the literature review related to goodwill, its accounting treatment and performance measurement, this article will be an attempt to determine the link between the value of goodwill from an accounting point of view and performance measurement based on the results of previous studies. In fact, our study will focus mainly on the M&A initiated in US between 2014 and 2016. Given these points, through our analysis we conclude a positive and strong relationship between goodwill and Residual Economic Income.JEL classification numbers: G32, O34, G34, O32, H11, M41Keywords: Goodwill, performance, value creation, super profit, goodwill accounting, acquisition.

Suggested Citation

  • Kaiss Sarra & Nezha Baghar & Mounime El Kabbouri, 2018. "Goodwill and Performance," Journal of Applied Finance & Banking, SCIENPRESS Ltd, vol. 8(3), pages 1-2.
    • Handle: RePEc:spt:apfiba:v:8:y:2018:i:3:f:8_3_2
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    References listed on IDEAS

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    1. Sohyung Kim & Cheol Lee & Sung Wook Yoon, 2013. "Goodwill accounting and asymmetric timeliness of earnings," Review of Accounting and Finance, Emerald Group Publishing Limited, vol. 12(2), pages 112-129, May.
    2. Sudipta Basu & Gregory Waymire, 2008. "Has the importance of intangibles really grown? And if so, why?," Accounting and Business Research, Taylor & Francis Journals, vol. 38(3), pages 171-190.
    3. Wen, He & Moehrle, Stephen R., 2016. "Accounting for goodwill: An academic literature review and analysis to inform the debate," Research in Accounting Regulation, Elsevier, vol. 28(1), pages 11-21.
    4. Mike Bourne, Andy Neely, John Mills, Ken Platts, 2003. "Implementing performance measurement systems: a literature review," International Journal of Business Performance Management, Inderscience Enterprises Ltd, vol. 5(1), pages 1-24.
    5. Christian Petersen & Thomas Plenborg, 2010. "How Do Firms Implement Impairment Tests of Goodwill?," Abacus, Accounting Foundation, University of Sydney, vol. 46(4), pages 419-446, December.
    6. Adriana Tiron Tudor & Ştefana Dima (Cristea) & Bogdan Dima & Raluca Valeria Raţiu, 2014. "The Linkage Between Intangibles And Profitability," Annales Universitatis Apulensis Series Oeconomica, Faculty of Sciences, "1 Decembrie 1918" University, Alba Iulia, vol. 1(16), pages 1-25.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    goodwill; performance; value creation; super profit; goodwillâ accounting; acquisition.;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government

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