Back to goodwill amortisation and the financial performance of public and private firms in Spain

  1. Peón, David 1
  2. Ruiz, Fernando 1
  1. 1 University of A Coruna, A Coruña-SPAIN
Journal:
Revista de contabilidad = Spanish accounting review: [RC-SAR]

ISSN: 1138-4891

Year of publication: 2024

Volume: 27

Issue: 1

Pages: 146-159

Type: Article

DOI: 10.6018/RCSAR.503021 DIALNET GOOGLE SCHOLAR lock_openDIGITUM editor

More publications in: Revista de contabilidad = Spanish accounting review: [RC-SAR]

Abstract

We take advantage of the change in goodwill regulation in Spain after 2016, to contribute with a comprehensive analysis of a scenario barely studied in the recent literature: the inverse transition from goodwill impairment to the systematic amortisation of goodwill. Using a database with the individual financial statements of all Spanish non-financial firms, both listed and non-listed, with positive goodwill on balance, we contribute in two instances. On the one hand, we seek to obtain evidence of whether managers behaved opportunistically during the impairment regulation period using a test of the determinants of goodwill impairment recognition. On the other hand, through a differences-in-differences approach against a sample of 4,000 control firms, we test the differential impact of the change in regulation on the return on assets of those firms with goodwill in their balances. Our results are in line with extant research suggesting that the systematic amortisation of goodwill paired with a periodic impairment test limits earnings management practices and help investors assess the economic performance of a firm.

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