I Goodwill Accounting Choices under Different Levels of Discretion

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What motives shape the initial accounting for goodwill under IFRS 3 in a setting dominated by controlling owners?

We investigate how different motives shape the initial accounting for goodwill in a setting dominated by controlling owners, using data from 1112 acquisition analyses reported by Swedish listed acquiring firms. In contrast to prior studies, we find no evidence that earnings-based compensation affects the proportion of the purchased price accounted for as goodwill. Instead, we find that when a family-owned firm is the acquirer, a larger proportion of the purchase price is accounted for as goodwill than as specific assets and liabilities. These two findings indicate that controlling owners may curb managerial motives, while controlling family owners apply the discretion of IFRS 3 according to their motives. We also find in this setting that acquisition-related motives have a significant impact on the proportion of the purchased price accounted for as goodwill. Overall, our analyses indicate that the motives shaping goodwill accounting choices depend on the institutional setting.publishedVersio

On the Value Relevance of Banks’ Valuation of Goodwill in Times of Financial Turmoil

Banks’ valuation of goodwill has been questioned by analysts and the media. Analysts suggest that bank management as of the inception of the financial crisis have exploited the unverifiable fair value goodwill accounting opportunistically. This suggestion implicitly implies that bank management was more likely than management of other industries to exploit goodwill accounting during the financial turmoil. In this thesis, I test whether the value relevance of banks’ valuation of goodwill was affected differently than other industries during the financial turmoil. To do so, I use the value relevance of the pharmaceutical industry’s valuation of goodwill as a control group for banks. Further, I hypothesize that (1) banks’ valuation of goodwill was value irrelevant since investors should have impounded the information of the analysts in the stock price; (2) pharmaceutical industry’s valuation of goodwill was value relevant since the financial turmoil did not severely affect its core business. The empirical result of the study suggests that the goodwill valuation of both banks and pharmaceuticals was value relevant. Moreover, the empirical result indicates that banks’ valuation of goodwill was not less value relevant than the pharmaceuticals’ valuation of goodwill. In summary, banks’ valuation of goodwill seems to have been value relevant during the financial turmoil.MSc in Accountin

CEO gender and the probability that firms go public

We study the association between the gender of the Chief Executive Officer (CEO) and the probability that firms go public through an Initial Public Offering (IPO), using data for the full population of Swedish IPO firms from 2005-2017, and matched private firms. We find that firms that go public are less likely to have a female CEO. The results are robust when we test for a change of CEO: firms that switch from a male to a female CEO are less likely to go public, and when we consider the gender balance among the board of directors