Research On Value-relevance Of Consolidated Goodwill And Goodwill Impairment

Produced by the mergers and acquisitions,consolidated goodwill is often listed o n the consolidated financial statements as a kind of special asset of an enterprise.With the increasingly fierce market competition,the amount of Chinese enterprises' purchased goodwill continues to increase,making goodwill become a vital part of their development.An enterprise will devalue its goodwill when it fails to achieve its expected profit target after mergers and acquisitions,or when its management adjusts the profit.When it comes to accounting treatment,goodwill impairment will induce a sharp fall in corporate profits.Therefore,for the sake of prudence principle of accounting,the damage to goodwill is not allowed to be reversed in the future once it is determined,which make goodwill impairment a permanent loss for enterprises.Based on the A-share listed companies' data during 2012 and 2016 in CSMAR and WIND databases,this paper established a residual income model to research on the consolidated goodwill,goodwill impairment,and the value correlation between goodwill impairment and profitable and loss-making enterprises.The results showed that after eliminating the goodwill existed in the early 2007 goodwill still had a high positive correlation with goodwill impairment.And when data of the companies' goodwill impairment were divided into profitable companies and loss-making ones,there were differences in the value correlation of goodwill and goodwill impairment: the value correlation of profitable enterprises was weaker than that of lose-making enterprises,and the impact of loss-making enterprises' goodwill impairment related to surplus management on market share price was smaller than that of profitable enterprises.This article is divided into five parts.The first part is an introduction which mainly focuses on the research backgro und,purpose,significance,ideas and methods as well as possible innovations.The second part is a review of relevant literature at home and abroad.It summarizes the previous research findings on goodwill and goodwill impairment and describes emphaticall y the researches on value correlation.The third part is about theories and theoretical analysis.This part compares the theories of goodwill and value correlation and international principles,and elaborates and analyzes the factors that affect goodwill i mpairment.The fourth part is mainly about empirical research design.It tests the results mentioned in Part Five through selecting samples,establishing models and assumptions,putting forward corresponding explanatory variables and explained variables,a nd discusses the research data based on relevant statistics and analysis.The sixth part is the study conclusion and suggestions.It mainly draws conclusions based on the results of the empirical research while putting forward some suggestions.