Value Relevance of Intangible Assets Recognized in a Business Combination

Objective: To verify the value relevance of intangible assets recognized in a business combination of Brazilian publicly traded companies. Method: The sample of 165 companies, covering 962 observations, from 2010 to 2017, was analyzed using five panel data regressions based on Ohlson's model (1995; 2005) to test four research hypotheses. Originality/Relevance: Value relevance studies have analyzed goodwill, but there are gaps this study seeks to fill. The study addresses the value relevance of intangibles assets recognized in a business combination for the stock market, exploring goodwill and other types of intangibles recognized in a business combination. Also, IFRS 3 was discussed in 2015, bringing the stock market's perspective and the standard application to the center of accounting research. Results: The results showed that goodwill represents 23% to 30% of intangible assets recorded in the balance sheet, while other intangibles identified represent around 5.6%. As for value relevance, it was observed that both the recognized value of the intangible assets and, when segregated in goodwill and in identified intangible assets, were significant and positively related to the market value. Concerning the nature of intangibles recognized in business combinations, some of them were related to market value. Theoretical/Methodological contributions: The research contributes to value relevance literature on business combinations, allowing us to understand that they are relevant to the stock market and contribute to Brazilian companies' market value.