Document Type
Thesis
Date of Award
2024
Degree Name
Master of Science (MS)
Department
Business
First Advisor
Nicholas E Wilson
Abstract
ASC 350-20 grants public business entities (PBEs) the discretion to determine timely recognition of goodwill impairment charges, which likely introduces managerial ambiguity in the goodwill impairment process. Consequently, this paper explores whether the ambiguity in goodwill accounting standards allows managers to engage in favorable financial reporting during economic disruption, such as the global financial crisis of 2008 and 2009 or the COVID-19 pandemic beginning in 2020. The study introduces an indicator variable to identify PBEs with highly elastic goodwill changes, providing insight into a PBE's internal processes and how its management practices for goodwill impairment differ from standard industry practices. We test our hypotheses through a sample of firms from 2003 – 2023 to evaluate if the indicator variable predicts goodwill impairment charges. Our evidence suggests that the procedural indistinctness ASC 350-20 allows did not exist during the global financial crisis; however, it is present during the COVID-19 years.
Subject Categories
Accounting
Keywords
ASC 350-20, COVID-19, FASB, Goodwill impairment, SFAS 142
Number of Pages
62
Publisher
University of South Dakota
Recommended Citation
Stevenson, Drew, "GOODWILL ELASTICITY AND THE OPPORTUNITY FOR FAVORABLE FINANCIAL REPORTING" (2024). Dissertations and Theses. 289.
https://red.library.usd.edu/diss-thesis/289