Predecessor versus Acquisition: Evidence of Business Combination under Common Control from China

Shimin Chen (First Author), Weifang Han (Participant Author), Qifeng Zhang (Participant Author)

科研成果: 期刊稿件期刊论文

摘要

We investigate the value relevance of two different accounting methods, predecessor vs. acquisition, for business combination under common control (BCUCC) in China. Based on the return and price models, we find that net income under the predecessor method is of higher value relevance than that under the acquisition method. Further analysis suggests that the difference appears to be driven by uncertainties in fair value estimation surrounding the BCUCC and that net incomes under predecessor method can better predict future earnings and future operating cash flows than under the acquisition method. Our research provides some initial evidence to support the use of the predecessor method in China, and at the same time, we discuss implications for the IASB standard setting project for the BCUCC.
源语言英语
期刊Emerging Markets Finance and Trade
DOI
出版状态已出版 - 2020

Corresponding author email

hanweifang002@126.com, zhangqf009@126.com

Project name

n/a

Project sponsor

National Natural Science Foundation of China

Project No.

71372070;;71502108;;71972134

关键词

  • Business combination under common control (BCUCC)
  • the acquisition method
  • the predecessor method
  • value relevance

成果物的来源

  • ABDC-B
  • SSCI

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