Accounting for business combinations and takeover premiums: Pre- and post-IFRS

Bugeja, M; Loyeung, A

Accounting for business combinations and takeover premiums: Pre- and post-IFRS

Bugeja, M

Loyeung, A

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Publication Type:: Journal Article
Citation:: Australian Journal of Management, 2017, 42 (2), pp. 183 - 204
Issue Date:: 2017-05-01

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Field	Value	Language
dc.contributor.author	Bugeja, M https://orcid.org/0000-0002-1941-5092	en_US
dc.contributor.author	Loyeung, A https://orcid.org/0000-0003-2049-0492	en_US
dc.date.issued	2017-05-01	en_US
dc.identifier.citation	Australian Journal of Management, 2017, 42 (2), pp. 183 - 204	en_US
dc.identifier.issn	0312-8962	en_US
dc.identifier.uri	http://hdl.handle.net/10453/124821
dc.description.abstract	© 2016, © The Author(s) 2016. The adoption of International Financial Reporting Standards (IFRS) in Australia in 2005 resulted in goodwill accounting shifting from systematic annual amortisation to impairment testing. We examine whether IFRS adoption changed the association between takeover premiums and the difference between a target firm’s pre-acquisition market and book values (pre-acquisition step-up). Our results show a negative association between takeover premiums and the pre-acquisition step-up of the target firm. This association reduces however, after Australia adopted IFRS and no longer required goodwill amortisation. Consistent with the incentives arising from contracts written around accounting numbers, our results are strongest for bidding firms which compensate their CEO using an accounting-based bonus plan. These results are robust to a battery of sensitivity tests.	en_US
dc.relation.ispartof	Australian Journal of Management	en_US
dc.relation.isbasedon	10.1177/0312896215614630	en_US
dc.title	Accounting for business combinations and takeover premiums: Pre- and post-IFRS	en_US
dc.type	Journal Article
utslib.citation.volume	2	en_US
utslib.citation.volume	42	en_US
utslib.for	1501 Accounting, Auditing and Accountability	en_US
utslib.for	15 Commerce, Management, Tourism and Services	en_US
pubs.embargo.period	Not known	en_US
pubs.organisational-group	/University of Technology Sydney
pubs.organisational-group	/University of Technology Sydney/Faculty of Business
pubs.organisational-group	/University of Technology Sydney/Faculty of Business/Accounting Discipline
utslib.copyright.status	open_access
pubs.issue	2	en_US
pubs.publication-status	Published	en_US
pubs.volume	42	en_US

Abstract:

© 2016, © The Author(s) 2016. The adoption of International Financial Reporting Standards (IFRS) in Australia in 2005 resulted in goodwill accounting shifting from systematic annual amortisation to impairment testing. We examine whether IFRS adoption changed the association between takeover premiums and the difference between a target firm’s pre-acquisition market and book values (pre-acquisition step-up). Our results show a negative association between takeover premiums and the pre-acquisition step-up of the target firm. This association reduces however, after Australia adopted IFRS and no longer required goodwill amortisation. Consistent with the incentives arising from contracts written around accounting numbers, our results are strongest for bidding firms which compensate their CEO using an accounting-based bonus plan. These results are robust to a battery of sensitivity tests.

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http://hdl.handle.net/10453/124821