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Is purchase price allocation to goodwill driven by opportunism?

Project Member(s): Bedford, A., Bugeja, M.

Funding or Partner Organisation: Accounting and Finance Association of Australia and New Zealand (Accounting & Finance Association of Australia and New Zealand - Research Grants)

Start year: 2015

Summary: The aim of this project is to provide evidence on whether the allocation of the purchase price to goodwill after an acquisition is driven by efficiency, opportunism or information asymmetry. Following a business combination the acquirer has significant discretion in allocating the purchase price as this allocation relies on fair value estimates. This discretion could be used to either manipulate the amount allocated to goodwill due to its impact on post-acquisition profits or to convey private information about future cash flows. Using takeover data from 1998 to 2013, the project aims to contribute to the limited evidence on goodwill recognition.


Loyeung, AL & Bugeja 2014, 'What drives the allocation of purchase price to goodwill?', European Accounting Association, Tallinn, Estonia.

Keywords: Goodwill, purchase price allocation, opportunism, IFRS

FOR Codes: Financial Accounting, Professional, Scientific and Technical Services