Do Size and Age of Acquisition Goodwill Matter for Value Relevance? Evidence from Thai Listed Firms

Manuscript type: Research paper Research aims: To examine the value relevance of total and age-based goodwill of different sizes. Design/Methodology/Approach: The study modifies Ohlson (1995) model and uses data from top 100 listed firms on the Stock Exchange of Thailand. Research findings: Goodwill of all ages has no significant effect on market value in the full sample, but it is value relevant in a subsample of firm-years with relatively large goodwill. Its value relevance persists in the years following acquisitions because goodwill impairment losses are infrequent and small. Theoretical contribution/Originality: Updated and long-period databases are applied to contribute to empirical literature on value relevance of goodwill by size and age in emerging economies. Practitioner/Policy implications: Targets should be strategically chosen to provide future earnings corresponding to increased amount of goodwill. Accounting standard setters should provide timely and high-quality information to benefit investors’ decision-making. The government should provide a conducive environment for acquirers and targets to develop goodwill for firm and economic growth. Research limitation: More studies from additional emerging markets, expanded database, and variety of research methods are needed to generalise the results.