Differential Market Reaction to Pooling and Purchase Methods.
Purchase Methods of Accounting for an Acquisition (Test-Statistic in Parentheses) Interval CAR of CAR of Test for Acquisitions Acquisitions Difference Using the Pooling Using the Method (a) Purchase Method (b) [-5,+5] -1.
Results indicate that valuation effects are more favorable for acquisitions using the purchase method in the eleven-day period surrounding the announcement and for at least six months following the announcements.
Exhibit 3 includes a comparison of depreciation and amortization for the pooling and purchase methods for 1999.
The study of business combination methods resulted in a Position Paper that communicated the groups' recommendation that all business combinations should be accounted for by the purchase method.
Purchase Methods of Accounting for an Acquisition (Test-Statistic in Parentheses) Interval CAR of Acquisitions CAR of Acquisitions Using the Using the Pooling Method (a) Purchase Method (b) [-5,+5] -1.
It is important to note that this variable directly accomplishes the purpose of testing the null hypothesis (H0) as the relatively low future earnings of firms using the purchase method are the primary reason for expecting higher abnormal returns for firms using the pooling method.