Debt contracting and the goodwill debate

IF 2.9 3区 管理学 Q2 BUSINESS, FINANCE Journal of Contemporary Accounting & Economics Pub Date : 2022-08-01 DOI:10.1016/j.jcae.2022.100316
Chandrani Chatterjee , Arpita A. Shroff , K. Sivaramakrishnan
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Abstract

Extant literature offers mixed evidence on the quality of goodwill after the promulgation of SFAS 141/2 (Li and Sloan, 2017; Lee, 2011; Chen et al., 2008). We reconcile these conflicting findings by examining the role of managerial incentives in determining the efficacy of SFAS 141/2 in improving the quality of goodwill reporting. Using the context of debt contracting, we find that the value-relevance of goodwill is higher for firms that include goodwill in debt covenants in the post-SFAS 141/2 period. We also find that in the post-period, firms that include goodwill in their debt contracts appear to take timelier impairments. In addition, debt contracts in these firms also have tighter covenant thresholds, further corroborating the increased value-relevance of goodwill under the current impairment regime. We also document a relatively higher frequency of covenant violation for firms that use goodwill in their debt contract in the post-SFAS 141/2 period. Taken together, our results inform ongoing discussions regarding the accounting for goodwill and provide new insight into understanding of debt contracting and the role of accounting standards therein.

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债务合同和商誉之争
现有文献对SFAS 141/2颁布后的商誉质量提供了不同的证据(Li和Sloan, 2017;李,2011;Chen等人,2008)。我们通过检验管理层激励在决定《财务会计准则》141/2在提高商誉报告质量方面的有效性中的作用,来调和这些相互矛盾的发现。在债务契约的背景下,我们发现,在《财务会计准则》第141/2号之后的时期,将商誉纳入债务契约的公司,商誉的价值相关性更高。我们还发现,在后期,在债务合同中包含商誉的公司似乎更及时地发生减值。此外,这些公司的债务合同也有更严格的契约门槛,进一步证实了在现行减值制度下商誉的价值相关性增加。我们还记录到,在sfas 141/2之后的时期,在债务合同中使用商誉的公司违约的频率相对较高。综上所述,我们的结果为正在进行的有关商誉会计的讨论提供了信息,并为理解债务合同及其会计准则的作用提供了新的见解。
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CiteScore
6.00
自引率
3.00%
发文量
24
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