Goodwill impairment after business combination among Jordanian shareholding companies

 Husam Al-Khadash and Asmahan Y. Salah

¹Hashemite University P. O. Box 330125, Postcode 13133, Hashemite University, Zarqa, Jordan.

²Central Bank of Jordan, Amman, Jordan.

*Corresponding author. E-mail: husam@hu.edu.jo. Tel.: 0096-795895944.

Accepted 28 April, 2009.

   Abstract

This study examined whether external users of financial statements are capable of assessing goodwill impairment apart from management. This study aimed at investigating goodwill write-offs resulted from acquisitions among Jordanian shareholding companies in Amman Stock Exchange (ASE) during 1985 - 2005. This study tested for the notion that the seeds of the eventual goodwill write-off are planted at the time of the acquisition. The likelihood of a write-off is related to an initial overpayment as indicated by acquisition characteristics as well as some of post acquisition performance indicators. The results of this study provided some support for the hypothesis that predicts the relationship between goodwill write-offs and acquisition and performance indicators. However, the study revealed that external users will not be able to assess goodwill impairment effectively within the available information and disclosure.

Key words: Goodwill, international accounting standards, impairment and acquisition.