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We examine the effects of international accounting diversity on the market for corporate control with particular reference to whether national differences in the treatment of purchased goodwill are associated with differences in premia offered by U.K. as opposed to U.S. acquirers of U.S. targets.We find merger premia associated with U.K. acquisitions to be consistently higher than those for U.S. acquisitions. Moreover, higher premiums offered by U.K. acquirors appear to be associated with not having to amortize goodwill to earnings. The evidence provided here suggests that national differences in accounting impact differentially on managerial behavior.

While many indicators point to the globalization of capital markets, one barrier may persist-International Accounting Diversity. Even though coordination of many national policies is gaining favor, the measurement and disclosure principles that underlie financial statements remain largely a nationalistic affair.

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