Compliance with Goodwill Accounting in a Low Enforcement Environment - An empirical study of Swedish listed companies

Abstract

In this paper, we examine the effects of CEO bonus intensity and monitoring of companies on companies mandatory disclosure on acquisitions. We conduct our study in a low enforcement environment by using unique data on Swedish listed companies in the years 2011-2013. In the analysis, we use a self-constructed disclosure index and ordered logistic regressions. We find that only 23 percent of all companies that made acquisitions disclosed all mandatory information. We also find that there is a positive relationship between the amount of monitoring a company is subject to and their disclosure on acquisitions and a negative relationship between CEO bonus intensity and the disclosure on acquisitions. We contribute to the literature by examining goodwill accounting in a low enforcement environment and by examining effects on mandatory disclosure instead of voluntary disclosure.