Doctoral Dissertations

Date of Award


Degree Type


Degree Name

Doctor of Philosophy


Business Administration

Major Professor

Terry Neal

Committee Members

Bruce Behn, Joe Carcello, Joan Heminway, Tracie Woidtke


The objective of this study is to examine the association between goodwill and governance structures – specifically, potential agency conflicts and internal and external board monitoring mechanisms – over a four-year period (2004-2007). To do this, I perform two distinct analyses to test (1) whether governance structures appear to be determinants of aggregate goodwill, and (2) whether governance structures appear to moderate investors’ perceptions of aggregate goodwill. I then extend these tests to a sample of U.S. merger and acquisition (M&A) transactions where I calculate a more refined measure of residual goodwill and re-perform the tests using this alternative goodwill measure. I find that potential agency conflicts are associated with both goodwill and residual goodwill, whereas monitoring mechanisms appear to have little measureable association with either of the goodwill measures. In addition, I provide evidence that investors perceive goodwill balances less favorably when agency conflicts are high and limited evidence that their perceptions of goodwill improve when external monitoring is strong. Based on these findings, I conclude that governance structures should be considered when evaluating goodwill. My results also suggest that previous findings based on residual goodwill may need to be reevaluated. Specifically, my analyses highlight an important distinction between the purchase price and consideration elements of residual goodwill, and I propose future avenues of research which may be used to investigate this important distinction further.

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