Determinants Of Reporting Nonrecurring Charges Subsequent To Business Combinations

2011 ◽  
Vol 24 (3) ◽  
Author(s):  
Nina T. Dorata
Keyword(s):  
Institutional Ownership ◽  
Font Size ◽  
Target Firm ◽  
Business Combinations ◽  
Acquisition Period ◽  
Cash Compensation ◽  
Business Combination ◽  
Restructuring Charges ◽  
Asset Impairments

<p class="MsoNormal" style="text-align: justify; margin: 0in 0.5in 0pt;"><span style="font-family: Times New Roman; font-size: x-small;">This study examines nonrecurring earnings charges following business combinations and the characteristics that influence their reporting.<span style="mso-spacerun: yes;">&nbsp; </span>The study uses a sample of 216 business combinations in which the acquiring firm reported either goodwill or other asset impairments or restructuring charges with respect to a target firm.<span style="mso-spacerun: yes;">&nbsp; </span>The results show that changes in the level of CEO cash compensation and institutional ownership are factors that are positively associated with nonrecurring earnings charges in the post-acquisition period.<span style="mso-spacerun: yes;">&nbsp; </span>The findings suggest that the transparency of nonrecurring transactions subsequent to a business combination is evident with the expense treatment of acquisition-related costs.</span></p>

scholarly journals Effects of business combinations on the competitive environment

2018 ◽  
Vol 5 (2) ◽  
pp. 51 ◽  
Author(s):  
Florentina Moisescu ◽  
Аnа-Mаriа Golomoz
Keyword(s):  
Development Strategy ◽  
Competitive Environment ◽  
Negative Effects ◽  
Business Combinations ◽  
The Development Strategy ◽  
Business Combination

<p>This paper deals with the results of the businesses combinations and the advantages felt in solving the problems of certain entities, the extension on other markets or obtaining increased quotas on the market. Also, businesses combinations can generate disadvantages regarding the access to credits or negative effects on the salary. A business combination is based on taking risks an has advantages as well as disadvantages, on both the short and the long term, while the decision of making it has in view the development strategy of the organisation. The aim of the paper is to analyze and balance the benefits and disadvantages of business combinations. It is questioned the need to use this method and its use only for the advantages obtained despite the existing disadvantages.</p>

Restructuring Charges and CEO Cash Compensation: A Reexamination

2003 ◽  
Vol 78 (1) ◽  
pp. 169-192 ◽  
Author(s):  
Davit Adut ◽  
William H. Cready ◽  
Thomas J. Lopez
Keyword(s):  
Adverse Effect ◽  
Executive Compensation ◽  
The Other ◽  
Cross Sectional ◽  
Factors Associated ◽  
Cash Compensation ◽  
Restructuring Charges ◽  
Restructuring Charge ◽  
A Charge ◽  
Compensation Committees

Prior research generally concludes that compensation committees completely shield executive compensation from the effect of restructuring charges on earnings. In contrast, we find that after controlling for the growth in annual inflation-adjusted CEO cash compensation, compensation committees only partially shield CEO compensation from the adverse effect of restructuring charges on earnings, on average. In further analyses, we identify factors associated with cross-sectional differences in the extent of shielding. Specifically, we find that compensation committees appear to: (1) completely shield initial and subsequent restructuring charges for CEOs with long tenure, provided that the firm had not recorded a charge in the two immediately prior years; (2) provide no shielding of subsequent restructuring charges taken by short-tenured CEOs if the firm reported a prior restructuring charge within two years of the current charge; (3) and partially shield the other categories of restructuring charges. Overall, this study provides evidence that compensation committees evaluate the context of each restructuring in determining the extent to which they will intervene to shield executive compensation from the effect of these charges.

Determinants of CEO Pay: A Comparison of ExecuComp and Non-ExecuComp Firms

2010 ◽  
Vol 85 (5) ◽  
pp. 1511-1543 ◽  
Author(s):  
Brian Cadman ◽  
Sandy Klasa ◽  
Steve Matsunaga
Keyword(s):  
Executive Compensation ◽  
Stock Returns ◽  
Institutional Ownership ◽  
Stock Option ◽  
Ownership Concentration ◽  
Positive Relation ◽  
Stock Liquidity ◽  
Compensation Contracts ◽  
Cash Compensation ◽  
Ceo Pay

ABSTRACT: We document that firms included in the ExecuComp database tend to be larger, more complex, followed by more analysts, have greater stock liquidity levels, and have higher total, but less concentrated, institutional ownership than other firms. Based on these differences, we test and find support for three predictions. First, ExecuComp firms rely more heavily on earnings and stock returns in determining CEO cash compensation. Second, the weight on earnings is more sensitive to differences in the extent of growth opportunities for ExecuComp firms. Third, the positive relation between institutional ownership concentration and the value of stock option grants is stronger for ExecuComp firms. Overall, our results suggest that ExecuComp and non-ExecuComp firms operate in different contracting environments that lead to differences in the design of their executive compensation contracts. As a result, care should be taken in extending results based on ExecuComp samples to non-ExecuComp firms.

scholarly journals Analysis of Business Combination Implementation at PT China Construction Bank Indonesia

2018 ◽  
Vol 4 (2) ◽  
pp. 184
Author(s):  
Andita Wulandari K ◽  
Zanuar Arifin ◽  
Amrie Firmansyah
Keyword(s):  
Financial Accounting ◽  
Business Combinations ◽  
Business World ◽  
Financial Conditions ◽  
China Construction Bank ◽  
Technological Advances ◽  
Financial Failure ◽  
Qualitative Descriptive ◽  
Business Combination ◽  
Market Consolidation

<p>This study aims to review the implementation of mergers conducted by the company. In Indonesia, merger activities are regulated in Indonesia Statement of Financial Accounting Standards Number 22 (hereinafter referred to as PSAK 22) concerning Business Combinations. Increased merger activities in the business world are driven by changes in economic conditions. The rise of merger and acquisition activities was caused by various things, such as technological advances, increasing financial conditions, excess capacity/financial failure, international market consolidation and deregulation.</p><p>The research method used in this research is qualitative descriptive with case studies of business combination events that occurred between PT Bank Windu Kentjana Internasional, Tbk as the party which received the merger and PT Bank Antardaerah as the company which joined. Regarding ownership, the name of PT Bank Windu Kentjana Internasional, Tbk changed to PT China Construction Bank Indonesia, Tbk (PT CCB Indonesia, Tbk).</p>The results of this study indicate that in general, the consolidated report of PT CCB Indonesia, Tbk for the period ended December 31, 2016, in general, has been prepared by PSAK 22, 2015.

scholarly journals New Accounting Guidance For Business Combinations

2011 ◽  
Vol 1 (1) ◽  
Author(s):  
Allen W. McConnell ◽  
Bill D. Cox ◽  
John E. Elsea
Keyword(s):  
Accounting Standards ◽  
Financial Accounting ◽  
Financial Accounting Standards Board ◽  
Business Combinations ◽  
Accounting Principles ◽  
Business Combination

The Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 141 Business Combinations in June 2001.  SFAS 141 supersedes Accounting Principles Board (APB) Opinion No. 16 Business Combinations and SFAS No. 38 Accounting for Preacquisition Contingencies of Purchased Enterprises.  APB Opinion 16 created two acceptable methods of accounting for a business combination, the purchase and the pooling of interests methods.  These two different methods often resulted in very different financial results for economically similar transactions.

scholarly journals The Impacts Of Institutional Stock Ownership On Stock Returns And Performance: A Financial Market Perspective

2011 ◽  
Vol 3 (3) ◽  
Author(s):  
Johnston Osagie ◽  
Gbolahan Solomon Osho ◽  
Cynthia Sutton
Keyword(s):  
Stock Returns ◽  
Financial Market ◽  
Stock Prices ◽  
Stock Price ◽  
Institutional Ownership ◽  
Small Companies ◽  
Font Size ◽  
And Performance ◽  
The Relationship ◽  
Market Perspective

<p class="MsoBodyText" style="line-height: normal; margin: 0in 0.5in 0pt;"><span style="font-size: 10pt;"><span style="font-family: Times New Roman;">Recent studies indicate that corporations with high Institutional ownership have higher stock prices than those with less Institutional ownership. Even small companies with high Institutional ownership have higher stock prices in their range. Institutions have researchers and analysts to investigate the financials and the industry potential of the firms. As a result, the perception is that high institutional ownership indicates good value<span style="color: #ff6600;">. </span>This study investigates if the percentage of institutional ownership directly correlates with the price of stocks.<span style="mso-spacerun: yes;">&nbsp; </span>The relationship between the Institutional ownerships and price was prevalent. This was more indicative among the large cap stocks than the small caps stocks.<span style="mso-spacerun: yes;">&nbsp; </span>It was also found that the higher the percentage of Institutional ownership does reflect a higher stock price.<span style="mso-spacerun: yes;">&nbsp; </span>This was manifest among the large caps than the small caps. </span></span></p>

A HISTORY OF POOLING OF INTERESTS ACCOUNTING FOR BUSINESS COMBINATIONS IN THE UNITED STATES

1991 ◽  
Vol 18 (2) ◽  
pp. 155-192 ◽  
Author(s):  
Frank R. Rayburn ◽  
Ollie S. Powers
Keyword(s):  
Accounting Standards ◽  
The United States ◽  
Securities And Exchange Commission ◽  
Financial Accounting ◽  
Financial Accounting Standards Board ◽  
Business Combinations ◽  
Accounting Principles ◽  
History Of ◽  
Business Combination ◽  
The Subject

This paper traces the development of pooling of interests accounting for business combinations from 1945 to 1991. The history of the pooling concept is reviewed chronologically with particular emphasis on the events of 1969–1970 that were related to the most recent pronouncement on the subject, Accounting Principles Board (APB) Opinion No. 16. Early in its life (1974), the Financial Accounting Standards Board (FASB) placed a project on its agenda to reconsider pooling of interests accounting. That project was removed from the FASB's agenda in 1981. APB Opinion No. 16 has gone essentially unchanged as it relates to the accounting for a business combination as a pooling of interests. Resolution of implementation issues has been left largely to the Securities and Exchange Commission and the accounting profession. The FASB has a project on its agenda on Consolidations and Related Matters that may impact pooling of interests accounting. There also is some pressure for the FASB to revisit accounting for business combinations.

The Information Content of Business Combination Disclosure Level

2009 ◽  
Vol 84 (1) ◽  
pp. 239-270 ◽  
Author(s):  
Ron Shalev
Keyword(s):  
Stock Returns ◽  
Information Content ◽  
Bad News ◽  
Purchase Price ◽  
Business Combinations ◽  
Future Performance ◽  
Information Set ◽  
Abnormal Stock Returns ◽  
Business Combination

ABSTRACT: This study explores causes and effects of business combinations disclosure level. Investigating the association between disclosure level on business combination and acquirers' future performance, I find that acquirers' future performance as measured by the change in ROA and by abnormal stock returns increases with abnormal levels of disclosure on business combinations. Investigating the determinants of business combination disclosure, I find that the disclosure level on business combinations decreases with abnormal levels of the purchase price allocated to goodwill. Both results provide evidence consistent with disclosure theory and suggest that acquirers tend to provide less forthcoming disclosure on less favorable acquisitions (“bad news”). I also provide evidence consistent with investors failing to immediately incorporate the information content of business combination disclosure level into their information set and evidence that investors are quicker to react to firms with negative abnormal disclosure.

scholarly journals Value Relevance vis-à-vis Disclosure on Business Combinations and Goodwill Recognized by Publicly Traded Brazilian Companies

2016 ◽  
Vol 28 (73) ◽  
pp. 77-92 ◽  
Author(s):  
Maíra Melo de Souza ◽  
José Alonso Borba
Keyword(s):  
Stock Price ◽  
Value Relevance ◽  
Stock Exchange ◽  
Statistical Significance ◽  
Financial Statements ◽  
Total Sample ◽  
Level Of Detail ◽  
Publicly Traded ◽  
Business Combinations ◽  
Business Combination

Abstract The objective of this study is to examine the value relevance of the level of disclosure on business combinations and goodwill recognized by publicly traded Brazilian companies. The research sample is composed of publicly traded Brazilian companies that carried out any type of business combination, as the acquiring entity, between 2010 and 2013, yielding a total sample of 202 observations. To measure the disclosure level of each, a metric was created based on CPC-15 R1 (2011) to examine certain disclosure items in order to render a greater level of detail. Data collection was carried out using the footnotes to the annual consolidated standardized financial statements (DFPs) available from the São Paulo Stock Exchange (BM&FBOVESPA) website. The results revealed that disclosure levels for business combinations are positively and significantly associated with the stock price of the companies analyzed. As to the recognition of goodwill during business combinations, despite the fact that it represents a significant share of the value of the transactions, no statistical significance explaining stock price behavior was found. It also bears mentioning that the average level of disclosure identified in the explanatory notes in the sample was very low, indicating that companies need to improve when it comes to transparency of information.

Impairment of intangible assets and disclosure by Italian banks

2019 ◽  
Vol 45 (2) ◽  
pp. 311-330 ◽  
Author(s):  
Anna Grazia Quaranta ◽  
Nico Di Gabriele ◽  
Ermanno Zigiotti
Keyword(s):  
Financial Crisis ◽  
Intangible Assets ◽  
Bivariate Analysis ◽  
Consolidated Financial Statements ◽  
Market Prices ◽  
Business Combinations ◽  
Content Type ◽  
Business Combination ◽  
Statistical Connection

Purpose The purpose of this paper is to examine the methods used to perform impairment test for intangible assets from a business combination and the information provided by the consolidated financial statements of a Group of Italian banks in the period 2009-2014. The purpose is to verify if, as assumed in literature, there is a positive link between profitability and the tendency of manager’s to post the impairment losses of intangible assets promptly and accurately. Design/methodology/approach The existence of a link between profitability and the quality of disclosure was verified by constructing correlation indices, and then ascertaining not only the reliability but also the strength and direction of the statistical connection between the above two aspects. A multivariate linear regression reconfirmed the results obtained by the previous bivariate analysis. Findings The results confirm the basic assumption, showing that the link between the aspects considered is statistically significant and positive in all the years in question. Originality/value This study fills a gap, given that no papers were found in literature specifically pertaining to banks and other financial institutions. Moreover, the decision to focus the study on Italian banks seems to be particularly appropriate for a number of different reasons: before the financial crisis, Italian banks made numerous acquisitions, posting high amounts for intangible assets; the financial crisis made the stock market prices plummet, thus making it necessary to write-off intangible assets from business combinations; and even before the ESMA, the Bank of Italy intervened on several occasions on the question of reporting, urging Italian banks to comply with disclosure requirements and impairment criteria.

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