Managerial Power,Ownership Type And Goodwill

In 2006,the new Accounting Standards measures goodwill as a separate asset.Since then,goodwill has gradually attracted academic attention.Under the promotion of the merger and reorganization policy,coupled with the development of domestic economy and the adjustment of industrial structure,there is a wave of mergers and acquisitions(M&A)in China.It is common to find high premium acquisitions,and therefore the goodwill has also increased sharply.The essence of goodwill is a kind of strength to obtain excess profit.But there are many irrational factors that make goodwill seriously overestimated.The frequent occurrence of goodwill impairment in the capital market also confirms this point.Therefore,this paper takes goodwill as the research object.And from the view of managerial power and property rights,the factors of goodwill are deeply explored.M&A is an important part of the vital strategic decisions.Therefore,the management staff who steers daily business activities will impose great impact on the M&A transaction.Based on the principal-agent theory,conflicts are common problems between owners and management.Especially in listed companies with centralized managerial power,managerial power is more likely to get rid of the constraints of internal governance mechanisms and avoid external supervision.Therefore,they can maximize their own interests through high premium M&A transactions.Meanwhile,under the property right background of our country,there are also differences in the regulatory environment of listed companies and their management.This opens up a new path to study the factors of goodwill.Accordingly,this paper constructs a research framework of managerial power,property right and goodwill.Firstly,this paper describes relevant literature in detail.Then,three research hypotheses are put forward according to relevant literature and theories.Finally,this paper selects the data from 2007 to 2019 for empirical test,and draws the following conclusions:(1)Company recognizes higher goodwill if its management level has more power;(2)Compared with non-state-owned enterprises,the amount of goodwill recognized by state-owned enterprises in M&A is lower;(3)The nature of state-owned property rights can weaken the influence of managerial power on goodwill;(4)Further research shows that goodwill recognized by the listed companies with higher managerial power will have a more serious negative impact on business performance.Combined with the conclusions and practical background,this paper proposes relevant policy recommendations from three perspectives:company level,market level and accounting policy level.It is hoped to help improve the efficiency of corporate governance,carry out M&A transactions in a scientific way,and promote the healthy and orderly development of China’s capital market.