Do Size and Age of Acquisition Goodwill Matter for Value Relevance? Evidence from Thai Listed Firms

Abstract

Manuscript type: Research paper
Research aims: To examine the value relevance of total and age-based
goodwill of different sizes.
Design/Methodology/Approach: The study modifies Ohlson (1995)
model and uses data from top 100 listed firms on the Stock Exchange of
Thailand.
Research findings: Goodwill of all ages has no significant effect on
market value in the full sample, but it is value relevant in a subsample of
firm-years with relatively large goodwill. Its value relevance persists in
the years following acquisitions because goodwill impairment losses are
infrequent and small.
Theoretical contribution/Originality: Updated and long-period databases
are applied to contribute to empirical literature on value relevance of
goodwill by size and age in emerging economies.
Practitioner/Policy implications: Targets should be strategically chosen to
provide future earnings corresponding to increased amount of goodwill.
Accounting standard setters should provide timely and high-quality
information to benefit investors’ decision-making. The government should
provide a conducive environment for acquirers and targets to develop
goodwill for firm and economic growth.
Research limitation: More studies from additional emerging markets,
expanded database, and variety of research methods are needed to
generalise the results.