The Effect of Accounting Standards on Business Acquisitions : An analysis of the Swedish acquisition market

Sammanfattning: The topic of business acquisitions has been much debated in 2022, largely due to Microsoft’s record-breaking acquisition of Activision Blizzard. Historically, business acquisitions and their corresponding goodwill values have been a thoroughly examined and debated subject between scholars and regulators due to the complexity and ambiguity of goodwill. Discussions regarding goodwill and acquisitions have been the foundation of many studies throughout the years. However, the effects of accounting standards on the factors of business acquisitions have not been examined thoroughly and therefore represents a knowledge gap in existing accounting literature. This thesis examines the relationship between the accounting standards IFRS and Swedish GAAP and their influence on business acquisitions. The focus of the thesis is on the number of business acquisitions as well as goodwill, or value added, to test if the standards themselves affect these factors. Other elements which could affect these factors are presented to broaden the research and isolate the accounting standard variable.  By examining Swedish business acquisitions during a five-year period, the authors have identified 406 business acquisitions that were of such quality that they could be examined further. The study is inspired by other studies in similar areas, especially a paper written by Kashiwazaki et al. (2019) in which the effect of IFRS adoption on business acquisitions in Japan is researched. However, this study is not focused on adoption, the aim of the research is to examine the impact of the standards themselves. By examining the two accounting standards and their correlation with the frequency of acquisitions as well as change in goodwill, patterns can be identified and conclusions regarding whether accounting standards affect the two factors can be drawn. Several theories are discussed in order to contextualize the research, and different perspectives regarding the acquisitions and goodwill are presented. To broaden the context of the subject, specific theories and their counterparts are presented to get both perspectives of a phenomenon. Agency theory and stewardship theory are explained and compared throughout the thesis and the conclusion of this paper is that stewardship theory is more valid when examining Swedish business acquisitions. Other theories such as the resource-based view are explained and connected to business acquisitions and the results of the thesis. Lastly, motives and benefits behind business acquisitions are discussed and conclusions are drawn based on the results of the tests conducted.  Two OLS regressions with corresponding T-tests for verifications showed a nonsignificant relationship between the dependent and independent variables in both tests. This means that there is no statistical significancy between either of the two factors and accounting standards. These findings suggest that there are other factors that are correlated with the number of business acquisitions and value added and explain the variance in these two factors. Some of the observable factors were the size of the firm, return on assets, operating income among others. In conclusion, there were no indications that accounting standards influence the number of business acquisitions nor value added.