A Two-tale Test of IFRS 3's Implications on Swedish Mergers and Acquisitions - Has the transition to an indefinite life of Goodwill changed managers acquisition behavior and the acquisition performance?

Sammanfattning: In this thesis we aim to answer two questions: (i) has the implementation of IFRS 3 changed manager's acquisition behavior; (ii) and does it have an impact on acquisition performance? The implementation of IFRS 3 in 2004 materially changed the way acquisitions are accounted for and reviewed. Advocators argue for increased transparency and accountability for M&As subsequent performance, while others fear increased managerial discretion. Although we are not able to make a clear-cut settlement in the tug-of-war between the two opposing sides of IFRS 3, our results show tendencies of managers being more negligent when acquiring post-IFRS, whereas less so if acquiring larger companies. While operating cash flow performance is ameliorated, the effect is mitigated when incorporating the price tag of the acquisition, which is further supported by a negative short-term stock market reaction. Altogether, our results are inconclusive with no apparent winner over managerial acquisition behavior and acquisition performance.