Goodwill impairment, M&A, and industry development—Empirical evidence from listed companies in China

ABSTRACT: Goodwill has been a controversial issue in China since 2007 when the new accounting standards changed the subsequent measurement of goodwill from periodic amortization to impairment testing. Using the change in subsequent measurement of goodwill, this paper examines the impact of goodwill accounting on corporate M&A and industry development. The paper finds that adopting the goodwill impairment test significantly increases firms’ M&A incentives, as evidenced by a significant increase in the frequency and probability of M&A and a significant reduction in the time interval between successive M&A at the industry level. From an industrial perspective, the impairment policy has significantly improved industry concentration, total factor productivity, and competitive advantage in international t

SUBMITTER: Wen Y 

PROVIDER: S-EPMC10449180 | biostudies-literature | 2023 Jan

REPOSITORIES: biostudies-literature