Template-Type: ReDIF-Article 1.0
Author-Name: Kieran James
Author-Workplace-Name: School of Accounting, Economics and Finance, Faculty of Business and Law, University of Southern Queensland, West Street Toowomba, QLD 4350, Australia
Author-Email: jamesk@usq.edu.au
Author-Name: Janice How
Author-Workplace-Name: Economics and Finance, Queensland University of Technology Business School, GPO Box 2434, Brisbane, QLD 4001, Australia 
Author-Name: Peter Verhoeven
Author-Workplace-Name: Economics and Finance, Queensland University of Technology Business School, GPO Box 2434, Brisbane, QLD 4001, Australia 
Title: On the Allocation of a Takeover Purchase Price under AASB1013
Abstract: The purpose of this paper is to document and explain the allocation of takeover purchase price to identifiable intangible assets (IIAs), purchased goodwill, and/or target net tangible assets in an accounting environment unconstrained with respect to IIA accounting policy choice. Using a sample of Australian acquisitions during the unconstrained accounting environment from 1988 to 2004, we find the percentage allocation of purchase price to IIAs averaged 19.09%. The percentage allocation to IIAs is significantly positively related to return on assets and insignificantly related to leverage, contrary to opportunism. Efficiency suggests an explanation: profitable firms acquire and capitalise a higher percentage of IIAs in acquisitions. The target's investment opportunity set is significantly positively related to the percentage allocation to IIAs, consistent with information-signaling. The paper contributes to the accounting policy choice literature by showing how Australian firms make the one-off accounting policy choice in regards allocation of takeover purchase price (which is often a substantial dollar amount to) in an environment where accounting for IIAs was unconstrained. 
Classification-JEL:
Keywords: purchased goodwill, identifiable intangible assets, accounting policy choice, information signaling, opportunism  
Journal: Asian Academy of Management Journal of Accounting and Finance
Pages: 1-34
Volume: 7
Issue: 2
Year: 2011
File-URL: http://web.usm.my/journal/aamjaf/vol 7-2-2011/7-2-1.pdf
File-Format: Application/pdf
Handle: RePEc:usm:journl:aamjaf00702_1-34