Intangible assets account for 60%-75% of the market capitalization value in most developed stock markets around the world. The US GAAP and IFRS Goodwill and Intangibles accounting regulations (ASC 805, Business Combinations; ASC 350, Goodwill and Intangible Assets; IFRS-3R, Business Combinations; and IAS 38, Accounting for Intangible Assets) are inefficient and create potentially harmful psychological biases. These regulations facilitate earnings management and money laundering, reduce competition within industries, and are likely to increase the incidence of fraud and misconduct. This article introduces a new goodwill/intangibles disclosure/accounting model that can reduce the incidence of fraud, information asymmetry, moral hazard, adverse selection, and inaccuracy. The article also introduces new economic psychological theories that can explain fraud, misconduct, and non-compliance arising from the implementation of the goodwill/intangibles accounting rules. |
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Year 2015 xArticle |
The Most Important Developments in Common Foreign and Security Policy Since 2004 from Hungarian Perspective |
Journal | Hungarian Yearbook of International Law and European Law, Issue 1 2015 |
Authors | Károly Grúber and Csaba Törő |
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Article |
Goodwill/Intangibles Accounting Rules, Earnings Management, and Competition |
Journal | European Journal of Law Reform, Issue 1 2015 |
Keywords | fraud, mergers and acquisitions, Games economic psychology, regulation, goodwill and intangibles |
Authors | Michael I.C. Nwogugu |
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