Should you trust the numbers? A survey to accounting professionals concerning goodwill accounting

• In Event: Financial Reporting Disclosures, Sustanability and Related Topics

Abstract

This paper studies accounting professionals’ perceptions of goodwill accounting under US GAAP with a survey to professional accountants, CPAs and financial analysts in the Pacific Northwest region of the United States. Principal component analysis is used to find prevailing lines of thought among recipients. Six lines of thought emerge which express either a critical perception toward management’s behavior in goodwill impairment testing or a positive attitude toward the treatment of goodwill in US GAAP. The analysis of how a respondent’s background affects his/her perceptions shows that respondents with a background in auditing are less likely to see a connection between managerial opportunism and goodwill accounting. In contrast, experienced professionals are more likely to perceive increased earnings management resulting from goodwill accounting.

Authors

• Jani Saastamoinen, University of Eastern Finland

• Kati Pajunen, Finnish Financial Supervisory Authority

• Merl David Gorton, Eastern Washington University

• Arsen Djatej, Eastern Washington University