Purchase Price Allocations : Do they Matter ?
Astolfi, Pierre; Paugam, Luc; Ramond, Olivier (2012-01), Purchase Price Allocations : Do they Matter ?, 35th EAA Annual Congress, 2012-05, Ljubljana, Slovénie
TypeCommunication / Conférence
External document linkhttp://halshs.archives-ouvertes.fr/halshs-00671611
Conference title35th EAA Annual Congress
MetadataShow full item record
Abstract (EN)Standards setters support that purchase price allocations (PPAs) enhance financial statement decision-usefulness whereas academics and practitioners challenge this statement. We test the consequences of the quality of PPAs, subsequent to business combinations, on change in market expectations. Using the concept of abnormal goodwill - as a proxy for PPAs' quality - we test the association between PPAs' quality and analyst forecasts revisions, change in forecasts dispersion, and analysts' accuracy of 200 major U.S. business combinations. We do not find evidence that PPAs' quality have material impact on change in market expectations, suggesting that market participants fail to fully integrate information content of PPAs. Consistently, we provide evidence that PPAs' quality enables to generate a profitable investment strategy as cumulated abnormal returns can be systematically generated based on abnormal goodwill recognized in PPAs.
Subjects / KeywordsPurchase Price Allocation; Market Expectations; Abnormal Goodwill; Business Combination
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Casta, Jean-François; Husson, Bruno; Paugam, Luc; Philippe, Henri; Ramond, Olivier (2013) Article accepté pour publication ou publié