Goodwill Accounting Choices

The three papers in Peter Edlund´ s thesis contribute to the literature on discretionary accounting and the results provide useful input for standard setters evaluation of fair value goodwill accounting.
PhD Defense

4 March 2019 10:05

Goodwill Accounting Choices

On Friday 15 March 2019 Peter Frii will hold a trial lecture on a prescribed topic and defend his thesis for the PhD degree at NHH.

Prescribed topic for the trial lecture:

Valuation of Intangibles

Trial lecture:

10:15 in Jebsen Centre, NHH

Title of the thesis:

Goodwill Accounting Choices under Different Levels of Discretion


The dissertation explores, in a collection of three papers, whether the level of discretion affects goodwill accounting choices, and thus the usefulness to investors. Goodwill is a residual accounting item constituting of acquired synergies and future superior earnings that can only be recognized after the completion of a corporate acquisition. Discretionary goodwill accounting has been a debated topic in the accounting literature because firms can either, due to lack of market prices, misuse the discretion to enhance future earnings, or present private information.

The three papers in the dissertation investigate different aspects of how levels of discretion affect goodwill accounting choices. The first paper, entitled The Purchase Price Allocation Decision, investigates whether managers’ misuse of discretion by overallocating the purchase price to goodwill is mitigated by the corporate ownership structure. Analyses show that in a setting with strong controlling owners, managerial incentives have no effect on goodwill. However, family owners tend to overallocate the purchase price to goodwill.

The second paper, entitled Did the Adoption of the Impairment-Only Approach Enhance the Representational Faithfulness of Initially Recognized Goodwill?, explores whether the change from historic cost to fair-value goodwill accounting improved the representation of initially recognized goodwill on acquired future economic performance. Analyses show that initially recognized goodwill does not provide a more faithful representation of acquired future superior economic performance. 

The third paper, entitled Does the Usefulness of Fair-Value Goodwill Accounting Depend on Industry-Specific Growth Opportunities?, investigates whether the impairment decision is affected by the firm’s industry-specific growth opportunities. Analyses show that firms with diminishing and non-diminishing industry-specific growth opportunities are as likely to report impaired goodwill. However, investors find goodwill impairments reported by firms with diminishing growth opportunities to be more value relevant information. The three papers contribute to the literature on discretionary accounting and the results provide useful input for standard setters evaluation of fair value goodwill accounting.     


12:15 in Jebsen Centre, NHH

Members of the evaluation committee:

Professor Frøystein Gjesdal (leader of the committee), Department of Accounting, Auditing and Law, NHH

Professor Leif Atle Beisland, University of Agder

Senior lecturerMari Paananen, Mari Paananen University of Gothenburg


Associate Professor Mattias Hamberg, University of Stavanger

The trial lecture and thesis defence will be open to the public. Copies of the thesis will be available from