An Investigation of Goodwill Accounting Policy Choice within a Specific Knowledge Framework

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Conference Paper

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This study, using Singapore data, investigates the relationship between Chief Executive Officers' ("CEOs") specific knowledge and the accounting method choice on capitalisation of goodwill. International Accounting Standard 22 (1987), applicable in Singapore in 1996, the year of the study, permits a choice between capialisation and subsequent amortisation and immediate wrtie-off of goodwill to reserves. This study proposes a positive relationship between human capital specificity of CEOs and the recognition of purchased goodwill on the balance sheet. Specific knowledge is unique to firms and is acquired through experience. Given that specialised assets arise from firm-specific circumstances, firm-specific knowledge potentially explains the recognition policies pertaining to specialised assets. Overall, the evidence in this study supports a positive relationship between CEOs' firm-specific knowledge and the capitalisation of goodwill.


Accounting for goodwill, Specific knowledge




Asia-Pacific Journal of Accounting & Economics Symposium