Research On Economic Consequences Of Goodwill

Along with the growing corporate mergers, increasing the amount of consolidated goodwill increased, increasing the enterprise's financial position and operating results, impacting on the capital market becoming more prominent, more and more people pay close attention its economic consequences. However, after the goodwill is recognized on the accounting, what kind of impact on enterprise's financial position, operating results and stock price in the end? And what are significant economic consequences?In 2006 the Ministry of Finance issued new China Accounting Standards (CAS) has the new requirements on recognition and accounting treatment of goodwill. Based on the review and summary of goodwill related research, we made a statistical analysis of accounting recognition and processing goodwill's situation. Then use the method of empirical study, showed goodwill and accounting earnings significantly positive correlation, illustrated point that the goodwill can significantly improve the profitability of enterprises. At the same time, goodwill and stock prices significantly correlated, illustrated point that the value of goodwill associated with strong.The main structure of this article: Chapter I: first proposed to study the problem, analysis of the significance of researching on the merger goodwill's economic consequences. Then we introduced the ideas, methods and organization of this paper to reader. The main purpose of this chapter is to pave the way for the analysis below.Chapter II: has combed the theorists discussed the nature of goodwill by systemic, and practitioner's research of the combined elements of goodwill, and on the discussion of negative goodwill. At the same time return to the domestic and international research literature on the issue of goodwill, and summarize the lack of the existing literature on the goodwill. There is no documentation to do empirical research on the economic consequences of the merger goodwill.Chapter III: The third chapter introduces the recognition and accounting treatment of goodwill under the new accounting standards, and discusses the similarities and differences of merger goodwill and the merger difference price. We made statistical analysis on the situation of recognition and accounting treatment about goodwill.Chapter IV: made use of the least square method, multiple regression analysis of the correlation between the goodwill and the accounting earnings.Chapter V: used the modified Ohlson model, empirical study of the correlation between the goodwill and stock prices.Chapter VI: is the final chapter of this paper. We were raised the proposal on the goodwill's value management and information disclosure about the two empirical research findings.