Date of Submission
Open Access Senior Thesis
Bachelor of Arts
2019 Jessica C Cruz
Prior to the implementation of FAS 142 in 2002, goodwill was amortized annually. Now, companies with goodwill on their books must test it annually for impairment. This paper examines the effectiveness of goodwill amortization and impairment of goodwill both before and after the adoption of FAS 142 by analyzing their effect on abnormal stock returns. My results regarding the effect of goodwill amortization on stock returns are inconsistent, suggesting that goodwill amortization is not useful in determining the value of a company. My results also suggest that the stock market anticipates goodwill impairments before they are announced.
Cruz, Jessica, "Accounting for Goodwill: The Effectiveness of Amortization and Impairments Before and After ASC 350" (2019). CMC Senior Theses. 2023.