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The Equity Valuation Implications of the Purchase and Pooling Methods of Accounting, Journal of Financial Statement Analysis

Abstract

This paper examines whether firms that choose the pooling of interests rather than the purchase method of accounting for business combinations enjoy a valuation premium. I provide evidence that pooling firms do trade at an apparent premium to purchase firms but that investors adjust accounting numbers for purchase and pooling firms to an equivalent basis so any premium is not due to the accounting method.

Type

Article

Author(s)

Linda Vincent

Date Published

1997

Citations

Vincent, Linda. 1997. The Equity Valuation Implications of the Purchase and Pooling Methods of Accounting. Journal of Financial Statement Analysis. 2(4): 5-19.

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