Int. J. of Accounting and Finance   »   2012 Vol.3, No.4



Title: UK empirical evidence on the valuation relevance of goodwill amortisation


Author: Maqsood Iqbal Qureshi


Address: 606 Rundlehorn Circle, Calgary, T1Y 5T9, Canada


Abstract: The main objective of this study, which relates to FRS 10, is to examine whether purchased goodwill amortisation for financial reporting in the UK provides relevant information to the market. To examine the relation between goodwill amortisation and market value, we use a valuation model that includes both balance sheet and income statement items as well as controls for the valuation effects of other intangibles (R&D and advertising), which previous similar research failed to control. For a large sample of UK firms over the period from 1998 to 2003, our results provide little support for valuation relevance of goodwill amortisation. These results are consistent with those of previous studies such as Jennings et al. (2001) and Moehrle et al. (2001), which report that amortisation of goodwill is not considered value relevant by investors.


Keywords: goodwill amortisation; value relevance; intangibles; market value; UK; United Kingdom; financial reporting; valuation models.


DOI: 10.1504/IJAF.2012.051004


Int. J. of Accounting and Finance, 2012 Vol.3, No.4, pp.367 - 381


Submission date: 25 May 2012
Date of acceptance: 20 Aug 2012
Available online: 13 Dec 2012



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