ACCOUNTING TREATMENT FOR GOODWILL AMONG BURSA MALAYSIA MAIN BOARD COMPANIES: THE CASE OF MAS 6

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Shamsul Nahar Abdullah Junaidah Hanim Ahmad Rokiah Ishak

Abstract

This paper investigates the method of accounting for goodwill among Malaysian listed companies. The issue of accounting for goodwill is important because accounting bodies in Malaysia had attempted to address the issue by issuing two exposure drafts on goodwill but none had become operative. Using data from the Bursa Malaysia (BM) non-finance Main Board listed companies over the period from 1996 to 2000, the study found that the percentage rate of firms employing the method of capitalization and amortization had increased steadily. Over the period, about two-third of firms adopted the method. This evidence should reflect the Malaysian firms' readiness to adopt an accounting policy that is used widely in developed countries. Findings from the logistic regression showed that a firm's size and goodwill size were significant in determining the accounting policy choice for goodwill. The direction of the influence of firm's size on the choice of the accounting policy for goodwill, nevertheless, did not support the agency theory prediction. The findings showed that large firms did not choose the accounting policy method that capitalized and amortized. The size of goodwill was found to be associated with the policy that did not capitalize and amortize. This evidence is consistent with our prediction.Keywords: goodwill, boards of directors, audit committees, corporate governance, Malaysia

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How to Cite
ABDULLAH, Shamsul Nahar; AHMAD, Junaidah Hanim; ISHAK, Rokiah. ACCOUNTING TREATMENT FOR GOODWILL AMONG BURSA MALAYSIA MAIN BOARD COMPANIES: THE CASE OF MAS 6. Management & Accounting Review (MAR), [S.l.], v. 3, n. 1, p. 103-121, june 2004. ISSN 2550-1895. Available at: <http://arionline.uitm.edu.my/ojs/index.php/MAR/article/view/525>. Date accessed: 13 dec. 2018.
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