The potential harms of goodwill impairment avoidance: Evidence based on future performance and stock prices

Han, Hongwen; Tang, Qingquan

doi:10.1016/j.cjar.2020.07.007

Cited by 16 publications

(9 citation statements)

References 32 publications

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“…When a company recognizes goodwill impairment, it is acknowledging that the value of an acquired company or its assets has decreased, which has a negative impact on the company's current performance. "Impaired goodwill is less able to create future profits and ignoring a shortterm impairment increases the probability of subsequently experiencing an extremely large impairment, which could significantly affect firm performance" [41]. Previous studies on goodwill impairment can be clasified into two major categories [42].…”

Section: Literature Reviewmentioning

confidence: 99%

Determinants of goodwill: Empirical study from emerging economies

Chelba

Melega

Grosu

2023

ijirss

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Goodwill is increasingly receiving the interest of investors, auditors and other users of financial statements, therefore the need for comprehensive information on this topic has grown over time. The aim of this article is to analyze the determinants of goodwill in companies from emerging economy countries. The research is structured in two stages. The first stage of the research consists of a bibliometric analysis of the literature that is focused on the goodwill topic. The second part of the research consists in building an econometric model in order to assess the determinants of goodwill based on data reported by firms in emerging economy countries in 2021, namely the data reported by 21,977 companies from 100 emerging economy countries, structured into 94 industries. The obtained results are represented by the development of an econometric model that shows the implications of net profit, Economic Value Added (EVA), Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA) and of research and development (R&D) expenses on goodwill fluctuations and vice versa. The results of our research highlight the fact that goodwill fluctuation is generated by the fluctuation of net profit, EVA, EBITDA and less by the R&D expenses. This study adds value to the literature by treating the subject differently, analyzing and evaluating the relationship between net profit, EVA, EBITDA, R&D expenses and goodwill.

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Section: Literature Reviewmentioning

confidence: 99%

Determinants of goodwill: Empirical study from emerging economies

Chelba

Melega

Grosu

2023

ijirss

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“…Other firm-specific factors, however, such as directors litigation risk coverage (Choi and Jung, 2021), financial constraint (He and Ren, 2017), financial derivatives (Dewally and Shao, 2013), deviation in real operations from industry operations (Francis et al. , 2016), goodwill impairment avoidance (Han and Tang, 2020) and intangible intensity (Wu and Lai, 2020) all have a positive association stock price crash risk (see Table 15).…”

Section: Micro-level Factorsmentioning

confidence: 99%

“…Firm-specific factors Stock price crash risk is negatively associated with firm-specific factors such as equity portfolio construction (Ak et al, 2016), short-sales constraints (Dang et al, 2019) and sticky cost (Tang et al, 2020). Other firm-specific factors, however, such as directors litigation risk coverage (Choi and Jung, 2021), financial constraint (He and Ren, 2017), financial derivatives (Dewally and Shao, 2013), deviation in real operations from industry operations (Francis et al, 2016), goodwill impairment avoidance (Han and Tang, 2020) and intangible intensity (Wu and Lai, 2020) all have a positive association stock price crash risk (see Table 15).…”

Section: Financial Transparencymentioning

confidence: 99%

Micro-, meso- and macro-level determinants of stock price crash risk: a systematic survey of literature

Ali¹,

Wilson

Husnain³

2022

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PurposeThis article conducts a thorough review and synthesis of the empirical research on the antecedents of stock price crash risk to ascertain the macro-, meso- and micro-level determinants contributing to stock price crashes.Design/methodology/approach The authors systematically reviewed 85 empirical papers published in ABS-ranked journals to assess the macro-, meso- and micro-level determinants causing stock price crashes.FindingsThe findings indicate that macroeconomic factors such as corporate governance, political and legal factors, socioeconomic indicators and religious beliefs have an effect on firm-level corporate behavior contributing to stock price crash risk. At a meso-level customer concentration, industry-level characteristics, media coverage, structural features of ownership and behavioral factors have a substantial effect on stock price crash risk. Finally, micro-level variables influencing stock market crash risk include CEO qualities and compensation, business policies, earnings management, financial transparency, managerial characteristics and firm-specific variables.Research limitations/implicationsBased on our analysis we identify priority areas for future research.Originality/valueThis is a seminal work using a multilevel framework to categorize the determinants of stock price crashes into micro-, meso- and macro-level factors.

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“…The equity market is a seen as crucial as a driver of the economic sustainability of any country, including Indonesia (Bathia et al, 2020;Han & Tang, 2020;Lusiana, 2020a;Usman et al, 2021). Stock prices are a crucial reference before investing in the capital market (Atems & Yimga, 2021;Huang & Liu, 2021;Tao et al, 2022).…”

Section: Introductionmentioning

confidence: 99%

Empirical Evidence from the Indonesia Stock Exchange: The Influence of Debt to Equity Ratio (DER) and Return on Equity (ROE) on Sharia Stock Prices

Bulkia

Burhannudin²,

Kurniaty

et al. 2022

ijtc

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This paper aims to obtain empirical evidence about the influence of the Debt to Equity Ratio (DER) and Return on Equity (ROE) on Islamic stock prices, either partially or simultaneously. An exploratory investigation of 26 companies classified as sharia with the criteria of the Jakarta Islamic Index on the Indonesia Stock Exchange. The secondary data analysis used is to collect complete financial data for the 2014-2018 period. The secondary data was successfully examined as many as 130, then processed using SPSS 26, then analyzed using regression. The findings of the investigation provide empirical evidence that the Debt to Equity Ratio (DER) and Return on Equity (ROE) have a positive and significant influence on Islamic stock prices, either partially or simultaneously. This study provides a theoretical contribution to limited research exploring the Debt to Equity Ratio (DER) and Return on Equity (ROE) with Islamic stock prices on the stock exchange in Indonesia. In practice, this research provides significant insights that can be used to measure the company's health and assess the company's ability to generate returns from shareholder investments of companies classified as sharia.

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The potential harms of goodwill impairment avoidance: Evidence based on future performance and stock prices

Cited by 16 publications

References 32 publications

Determinants of goodwill: Empirical study from emerging economies

Determinants of goodwill: Empirical study from emerging economies

Micro-, meso- and macro-level determinants of stock price crash risk: a systematic survey of literature

Empirical Evidence from the Indonesia Stock Exchange: The Influence of Debt to Equity Ratio (DER) and Return on Equity (ROE) on Sharia Stock Prices

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