A Study On The Impact Of Goodwill Impairment On The Stock Returns

In recent years,frequent mergers and acquisitions in China's A-share market have led to a sharp increase in goodwill assets.From 2007 to 2018,the total goodwill assets of listed companies increased from 42 billion yuan to 1.45 trillion yuan.At the same time,goodwill impairment also began to appear in large quantities,and frequently became one of the reasons for the black swan performance of listed companies.This phenomenon was particularly evident during the annual performance forecast period of 2018.Many listed companies suffered huge losses due to the huge goodwill impairment,which led to a sharp decline in stock prices.A series of problems caused by the impairment of goodwill have attracted much attention in the market.However,the current academic literature on the impairment of goodwill mainly focuses on the purpose and motivation of impairment of assets,while there are few studies on the relationship between impairment of goodwill and stock returns.At present,behind the huge amount of goodwill assets is the potential significant impact of goodwill impairment on China's A-share market.Under this background,it is necessary to conduct in-depth research on the relationship between goodwill impairment and stock return.So,what is the impact of impairment of goodwill on the stock return? Is the impact the same for different companies? This paper tries to answer these questions,providing reference for theory and practice.Based on the data of A-share non-financial listed companies from 2008 to 2017,this paper makes a regression analysis based on the clean surplus model proposed by Ohlson(1995).Firstly,this paper examines the impact of impairment of goodwill on stock returns in general.Then,from the perspective of accounting information distortion,the whole sample is divided into groups to discuss the differences of this impact on different companies.Finally,it examines the differences of this impact on different companies.Construct earnings management variables to provide further explanation for the regression results.This paper finds that,firstly,in general,the impairment of goodwill has a significant negative impact on stock returns;secondly,under the same conditions,the impairment of goodwill of profit-making companies has a more significant impact on stock returns than that of loss-making companies,and the impact is more significant with the increase of goodwill proportion;thirdly,under the same conditions,the impairment of goodwill of non-state-owned enterprises has a significant impact on stock returns.The impact of rate on stateowned enterprises is more significant,and this effect is more significant with the increase of the proportion of institutional ownership;fourth,for the samples whose relationship between goodwill impairment and stock return is not significant,there is relatively strong earnings management in general,especially negative earnings management,which confirms the possibility of accounting information distortion from the side.The results of this study provide an important theoretical basis for indepth analysis of the impact of the current impairment of goodwill on the stock market in China.The possible innovations of this paper are as follows: Firstly,this paper not only discusses the loss-making companies and profit-making companies in groups,but also further discusses them in groups based on the proportion of goodwill.In addition,this paper also discusses the state-owned enterprises and non-state-owned enterprises in groups,and further discusses them in groups based on the proportion of institutional ownership.Secondly,From the perspective of accounting information quality,this paper constructs earnings management variables by using the revised Jones model(Dechow et al.,1995)and tests the mean difference of earnings management variables in groups,which proves the conjecture that accounting information distortion leads to the decrease of value relevance and enriches the research results in this field.