Non-additivity in accounting valuation: Internally generated goodwill as an aggregation of interacting assets

Jean-François Casta (1) , Luc Paugam (1) , Hervé Stolowy (2)

1 DRM - Dauphine Recherches en Management
2 GREGH - Groupement de Recherche et d'Etudes en Gestion à HEC

In this paper we propose a new method to explain the creation and measure the value of internally generated goodwill (IGG). Our method is based on the idea that firm value is affected by interactions between assets used in combination to conduct business. This novel approach contrasts with the traditional additive approaches to valuing IGG, which assume assets are independent. We use Choquet capacities, i.e., non-additive aggregation operators, to explain the creation of IGG, and demonstrate from a sample of U.S. high technology sector firms that this model performs better than the traditional additive Ohlson model on accuracy in forecast enterprise value.

Mots clés: Internally generated goodwill; Going concern goodwill; Synergy; Choquet integral; Residual income model

Domaines: Gestion et management

Jean-François Casta, Luc Paugam, Hervé Stolowy. Non-additivity in accounting valuation: Internally generated goodwill as an aggregation of interacting assets. European Accounting Association (EAA) 2011 annual meteing, Apr 2011, Rome-Siena, Italy. Financial reporting session. ⟨halshs-00541525v3⟩