The Mediating Effect of Incentive-based Compensations on the Association Between Managerial Ability and Fair Value Accounting

• In Event: Breakfast with Research Roundtable Forum Session
  In Paper Session: Roundtable 4: Financial Accounting III

Abstract

This paper examines the association between managerial ability and post-acquisition goodwill impairment after merger and acquisition events. Particularly, it examines the effect of managerial abilities on future goodwill subsequent to merger and acquisition activities completed in U.S. context after the application of the Statement of Financial Accounting Standards “SFAS” 142, Goodwill and Other Intangibles Assets, in July 2001. Further, it tests the mediating effect of incentive-based compensation, if any, on the association between managerial abilities and goodwill change post acquisition. Our study contributes to two overlapping streams of research: (1) managerial ability and fair value accounting, and (2) the non-linear effect of CEO compensation structure on the association between managerial ability and fair value accounting.

Authors

• Dina F El Mahdy, Morgan State University

• Rasha Elbolok, Suez Canal University