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Non-additivity in accounting valuation: Internally generated goodwill as an aggregation of interacting assets

Casta, Jean-François; Stolowy, Hervé; Paugam, Luc (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), 2011-04, Rome, Italie

Type
Communication / Conférence
External document link
http://halshs.archives-ouvertes.fr/halshs-00541525/fr/
Date
2011
Conference title
34th Annual Congress of the European Accounting Association (EAA 2011)
Conference date
2011-04
Conference city
Rome
Conference country
Italie
Pages
48
Metadata
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Author(s)
Casta, Jean-François
Stolowy, Hervé
Paugam, Luc
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 / Keywords
Residual income model; Choquet integral; Synergy; Going concern goodwill; Internally generated goodwill
JEL
G12 - Asset Pricing; Trading Volume; Bond Interest Rates
M41 - Accounting
M40 - General