An Empirical Study On The Influence Of Purchased Goodwill

As China’s economic development and the strong acceleration of industry consolidation, in order to gain a competitive advantage in a highly competitive market to ensure the survival and development, more and more companies pay their attention which looking for the ways to achieve the strategic development goals to the merger. In 2006, consolidated goodwill as an important asset list in the balanced sheet separately in the new "Accounting Standards for Enterprises", it could have a significant impact on real earnings and future profitability. The new "Accounting Standards for Enterprises" clearly states not confirm generated goodwill, negative goodwill can not be confirmed, so in this paper, we study positive goodwill which is produced by mergers.The article take the theory of "the excess returns" as theoretical basis and use it as a breakthrough point for empirical research. The purpose of business is to achieve profitability, to obtain excess returns, so that the enterprise value and shareholder value maximization, this article will first compare goodwill with other assets, to verify the contribution of goodwill to profitability is the largest. Based on the contribution of goodwill to profitability perspective to study the influence factors of goodwill, indirectly establish the relations among goodwill factors, goodwill, and the profitability.This paper finally choose 2009- 2013 data of listed companies as research samples, study the influence degree of goodwill to profitability and factors affecting goodwill with the empirical research method. In this paper, descriptive statistics, correlation analysis and regression analysis, firstly, in order to research the contribution to the profitability of goodwill, we select the total assets of the net interest margin to reflect the profitability of enterprises; subsequently, we select nine indicators represent an outstanding management team, high quality employees, effective advertising, corporate reputation, financing capability, high level of marketing, great location, good relations with the government, the appropriate cash reserves nine quantifiable factors affecting goodwill, to verify the relationship between the nine factors and goodwill.By studying, we get the following conclusions: excellent management team, effective advertising, corporate reputation, high level of marketing, great location, good relations between government and enterprises, appropriate cash reserves can significantly affect the value of goodwill; high-quality employees, modest financing capacity influence to goodwill though not significantly but has a positive effect; the contribution of goodwill to profitability is the largest. By recurrence relations we know that improvement factors of goodwill can ultimately improve profitability, gain more excess returns.Every coin has its two sides, goodwill is no exception. This article suggested that, the enterprises should consider carefully when confirm merger goodwill, to avoid inestimable losses to the enterprise in the future because of goodwill impairment which is caused by mismanagement or goodwill overestimate. Once confirm goodwill, the enterprises should give full play to the goodwill value creation function, promote the competitiveness.