Real Options, Enforcement of Goodwill/Intangibles Rules, and Associated Behavioral Issues

24 Pages Posted: 13 Dec 2013

Date Written: 2013

Abstract

While Real options Theory (ROT) has been touted as a viable alternative for valuing projects, the enforcement and efficiency of the Goodwill and Intangibles accounting regulations (ASC 850, Business Combinations, and ASC 350, Goodwill and Intangible Assets; IFRS-3R (Business Combinations) and IAS 38 Intangible Assets (accounting for Intangible Assets) raise several problems and psychological issues. These regulations are likely to increase the incidence of fraud and misconduct. The standard real options analysis framework is not entirely applicable to enforcement of, and litigation about Goodwill/Intangibles Regulations. This article also introduces new economic psychology theories that can explain fraud, misconduct and non-compliance that may arise from the implementation of these accounting rules.

Keywords: Fraud; Mergers & Acquisitions; Disclosure; Economic Psychology; Real Options; Evidence; Standards-of-Proof; Complexity; Intangibles/Goodwill

Suggested Citation

Nwogugu, Michael C. I., Real Options, Enforcement of Goodwill/Intangibles Rules, and Associated Behavioral Issues (2013). Available at SSRN: https://ssrn.com/abstract=2366625 or http://dx.doi.org/10.2139/ssrn.2366625

Michael C. I. Nwogugu (Contact Author)

Independent ( email )

P. O. Box 11104
Enugu 400007, Enugu State 400007
Nigeria
2348149062100 (Phone)

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