Non-additivity in accounting valuation: Internally generated goodwill as an aggregation of interacting assets
Stolowy, Hervé; Paugam, Luc; Casta, Jean-François (2011), Non-additivity in accounting valuation: Internally generated goodwill as an aggregation of interacting assets, 34th Annual Congress of the European Accounting Association (EAA 2011), 2011, Rome, ITALY
TypeCommunication / Conférence
Conference title34th Annual Congress of the European Accounting Association (EAA 2011)
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Abstract (EN)In this paper we propose a new method to explain the creation and measure the value of internally generated goodwill (IGG). Our method is based on the idea that firm value is affected by interactions between assets used in combination to conduct business. This novel approach contrasts with the traditional additive approaches to valuing IGG, which assume assets are independent. We use Choquet capacities, i.e., non-additive aggregation operators, to explain the creation of IGG, and demonstrate from a sample of U.S. high technology sector firms that this model performs better than the traditional additive Ohlson model on accuracy in forecast enterprise value.
Subjects / KeywordsChoquet integral; Internally generated goodwill; Going concern goodwill; Synergy; Residual income model
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