Managerial Discretion in Acquisition Accounting: Evidence from U.S. Technology Sector Transactions During 2004 - 2014
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School of Business |
Master's thesis
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Author
Date
2017
Department
Major/Subject
Mcode
Degree programme
Accounting
Language
en
Pages
45
Series
Abstract
Objectives of the study The objective of the study was to examine whether management uses discretion in purchase price allocation and to find out which balance sheet items are systematically affected by it. At the same time, the study aims to explain the underlying reasons for this behavior and to describe how it is made possible by the modern-day accounting standards. The empirical part of the study focuses on publicly traded technology sector companies in the United States. Data and methodology The main sample used in this study consists of 85 transactions between years 2004 and 2014. The data for this research was collected using SDC for historical M&A data in the technology industry and Compustat for financial statement data. The financial statements that were studied were all prepared under the current standards of business combinations and goodwill impairment. Parametric T-test was used to examine the differences in accrual reliability between accrual categories. Results The results of the conducted analysis confirm that there are differences in reliability between different accrual categories. My results support those of prior literature and show that managers do exercise discretion in acquisition accounting. This behavior seems to be particularly strong towards certain accrual categories, such as intangible fixed assets. The results of my study support the view that there continues to be a need for discussion over the development and focus areas of accounting standards.Description
Thesis advisor
Jarva, HenryKeywords
yrityskaupat, liikearvo, IFRS, US GAAP, johdon harkinnanvaraisuus, teknologiasektori, luotettavuus, yhteenliittymät
