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Reflections on M&A accounting from AOL’s acquisition of Time Warner

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  • Paul M. Healy

Abstract

In early 2000, AOL announced the acquisition of Time Warner for $162 billion. The acquisition, one of the largest in history, generated $127 billion of goodwill. Yet after only a few years, the merged firm had taken an impairment charge for $99 billion, and the acquisition was viewed as a colossal failure. This study examines how the deal was initially reported and valued, the timeliness of the goodwill impairments, and how the market interpreted the reporting. Given this field evidence, I revisit key questions on M&A reporting standards and implications for future research.

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  • Paul M. Healy, 2016. "Reflections on M&A accounting from AOL’s acquisition of Time Warner," Accounting and Business Research, Taylor & Francis Journals, vol. 46(5), pages 528-541, August.
    • Handle: RePEc:taf:acctbr:v:46:y:2016:i:5:p:528-541
    DOI: 10.1080/00014788.2016.1182709
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    References listed on IDEAS

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    Cited by:

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    2. Lim, Steve C. & Macias, Antonio J. & Moeller, Thomas, 2020. "Intangible assets and capital structure," Journal of Banking & Finance, Elsevier, vol. 118(C).

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