Tech Stock Valuation

goodwill include asset values that are effectively written off by investors during

the year of acquisition.

Following Hirschey and Richardson (2002), this chapter tests the information

content of accounting goodwill numbers using an event-study methodology that

avoids potential pitfalls of the balance sheet models tested by Chauvin and

Hirschey (1994), among others. As noted by Chauvin and Hirschey (1994),

important positive influences of advertising and research and development

(R&D) on goodwill are apparent, as are beneficial spillover effects of identifiable

intangible assets. A reservoir of customer goodwill enjoyed by large firms with

significant tangible ...