Browsing by Author "Raithle, Christopher Bengt"
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- Goodwill : a controversial accounting issue and its effects on M&A’sPublication . Raithle, Christopher Bengt; Reis, Ricardo César Ribeiro Ventura FerreiraThe purpose of this applied-research project is to give an extensive literature review to understand post-merger issues like composition of goodwill, the recognition of it according to International Financial Reporting Standards (IFRS) and goodwill as a tool for earnings management. This present thesis summarizes important findings, knowledge of earnings management and goodwill and depicts them by means of previous studies, books and magazines. The aim is to show the reader, on the basis of a fundamental literature review, the importance of goodwill accounting for companies, how the subjective standards of International Accounting Standard Board (IASB) are used in management, and why a principal-agent problem and non-transparent performance figures occur. The focus of this present paper is on goodwill impairment and earnings management, which can be used to manipulate the financial performance of companies. The paper also discusses how ‘goodwill’ is definied and identified according to IFRS and why goodwill is a relevant topic in our present and especially, future economy. The impairment-only approach and the characteristics of goodwill impairment will be adressed in detail and it will be shown how the change of IASB impairment standard has highly influenced earnings management. Furthermore, various types of earnings management and the addresses of the interest groups of each will be discussed. This will be highlighted by a far-reaching literature review. The paper concludes with the importance of correct goodwill measurement, the risk of wrong goodwill recognition, and pro and cons of earnings management for different parties.