Determinants Of Reporting Nonrecurring Charges Subsequent To Business Combinations

This study examines nonrecurring earnings charges following business combinations and the characteristics that influence their reporting.  The study uses a sample of 216 business combinations in which the acquiring firm reported either goodwill or other asset impairments or restructuring charges with respect to a target firm.  The results show that changes in the level of CEO cash compensation and institutional ownership are factors that are positively associated with nonrecurring earnings charges in the post-acquisition period.  The findings suggest that the transparency of nonrecurring transactions subsequent to a business combination is evident with the expense treatment of acquisition-related costs