Economic consequences of SFAS 142 goodwill write-offs

Henry Jarva*

*Corresponding author for this work

Research output: Contribution to journalArticleScientificpeer-review

9 Citations (Scopus)


This paper examines the economic consequences of goodwill write-offs under Statement of Financial Accounting Standards No. 142 (SFAS 142). Although write-off firms have performed poorly, it is evident that deteriorating economic performance explains only a small proportion of write-offs. After controlling for endogeneity of write-off choice, I fail to find evidence that investors and analysts fixate on SFAS 142 goodwill write-offs. I also provide evidence that write-off firms pay higher audit fees, suggesting that auditors charge higher fees in response to extra audit effort. These results are consistent with the principles of market efficiency, analyst-forecast rationality and efficient audit pricing.

Original languageEnglish
Pages (from-to)211-235
Number of pages25
Issue number1
Publication statusPublished - Mar 2014
MoE publication typeA1 Journal article-refereed


  • Audit fees
  • Conditional conservatism
  • Fair-value accounting
  • Market efficiency
  • Propensity score matching


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